Telefonica SA, the Spanish telecom giant, on Sunday said that it would pay $1 billion to boost its ownership stake in China Unicom (Hong Kong) Ltd., adding its influence in the world’s largest mobile market.
Unicom, China’s second biggest wireless carrier, and Telefonica, the second biggest European telecom company, will trade $1 billion investments. Telefonica would boost its stake in Unicom from 5.4 percent to 8.1 percent, whereas Unicom gains 0.89 percent ownership in the European phone company.
Telefonica sees value in Unicom, which recently signed a deal with Apple Inc. to be the exclusive distributor of the iPhone smartphone device in China, a country with more than 700 million mobile phone users.
The companies will also “cooperate in various business areas such as the joint acquisition of infrastructure and equipment for customers, the joint development of wireless service platforms, the joint provision of services to multinational enterprises,” among other things, according to a joint statement.
The alliance gives “us a combined global customer base of nearly 550 million. We are fully committed to the alliance and will exploit the synergies offered by this far-reaching cooperation to benefit our shareholders and customers alike,” said Telefonica Chairman César Alierta.
With the investment, Telefonica will become the largest foreign shareholder of Unicom. The second biggest foreign shareholder is SK Telecom Co. of South Korea, with a 3.8 percent stake.
Unicom will begin selling the iPhone in the fourth-quarter 2009.