Chinese state-owned telecom company China Unicom, formally known as China United Network Communications Group, is to receive about $12 billion investment from Chinese tech firms Baidu and JD.com in a move to boost the telco lagging behind its rivals China Mobile and China Telecom, a source told Business Insider.
The Chinese government is reportedly attempting to drive investment in state-owned giants through private capital. The government selected China Unicom among other state-owned enterprises last year, the report says, to see “mixed-ownership reform”.
From an outside perspective, China Unicom appears strong, as one of the world’s largest carriers by user numbers, but the company’s earnings don’t measure up to its fierce competition. The carrier, according to the report, is perceived as slow, often lagging behind its competition in terms of developing new technologies and services, including cloud and big data services, and mobile software.
Chinese tech giants Alibaba and Tencent would be among new investors contributing a total of about $10 billion into China United Network Communications, China Unicom’s Shanghai-listed unit, Reuters reported last month. With Baidu’s 10 billion yuan investment ($1.48 billion) and JD.com’s 5 billion yuan, the total investment in China Unicom is about 80 billion yuan ($11.8 billion).
The source told Business Insider that 15 billion yuan is likely to be raised from Tencent and invested into China Unicom, while Alibaba is likely to raise about 7 billion yuan. The biggest investor, however, would be China Life Investment, which would commit about 20 billion yuan.
The unnamed sources claim majority of the capital would be raised through new shares, while China Unicom would sell off its stake in the Shanghai unit. Thomson Reuters data suggests that it would be the most significant capital raising in Asia Pacific since insurer AIA Group’s initial public offering in 2010.