Phone
Telefonica will increase its holding in Unicom, Chinas second-biggest wireless carrier, to 8.1 percent from 5.4 percent, the two companies said in a joint statement yesterday. Telefonica also agreed to sell an equal value of shares to Unicom, which may gain a stake of as much as 0.89 percent in the Spanish company, according to the statement.
The Madrid-based carrier will strengthen its position as Unicoms biggest overseas investor as the Chinese company starts commercial operations of third-generation networks this month. Unicom last month reached an accord with Apple Inc. to sell the iPhone handset, helping its plan to market the high-speed services to the countrys more than 700 million wireless users.
“This is great news for Telefonica,” said Alberto Espelosin, who helps manage about $10 billion at Zaragoza, Spain-based Ibercaja Gestion and owns the stock. “Entering the Chinese market is extremely difficult and Telefonica is in an enviable position.”
Unicom will issue 693.9 million new shares to Telefonica at HK$11.17 each, compared with the stocks closing price in Hong Kong of HK$10.74 on Sept. 4. The Chinese company will buy 40.7 million Telefonica shares at 17.24 euros apiece, according to the statement.
Spanish Stake
Telefonica shares have gained 9.7 percent this year, valuing the company at 81.8 billion euros ($117 billion). Unicom has climbed 15 percent, valuing the company at HK$255.3 billion ($32.9 billion).
Telefonica initially invested in China Netcom Group Corp. in 2005. The Chinese fixed-line carrier was acquired by Unicom last year in a share-only deal as part of a government-led reorganization of the domestic phone industry.
The Spanish carriers stake in Unicom following the latest increase will be more than double the 3.79 percent that is held by South Koreas SK Telecom Co., according to the Chinese companys Web site.
Under the accord, Telefonica and Unicom also agreed to co- operate on the purchasing of handsets and phone equipment, roaming, and the provision of network services, the statement said.
700 Million Handsets
Unicom, based in Beijing, added 680,000 mobile-phone subscribers in July for a total of 141.1 million at the end of the month. That is less than a third of China Mobile Ltd.s total of 497.7 million.
Unicom will begin commercial operations of its 3G services at the end of this month, it said on Aug. 28. The company said that day it will start selling Apples iPhone in the fourth- quarter.
Julio Linares, Telefonicas chief operating officer, said Sept. 1 the company planned to gradually boost its stake in Unicom to 10 percent. He didnt give a time frame. Telefonica is Europes second-largest phone company.