Telecommunication giants China Unicom and Telefonica enhance strategic alliance

Telecommunication giants China Unicom and Telefonica enhance strategic alliance

2011-01-24 08:13:10 GMT+7 (ICT)

MADRID, SPAIN (BNO NEWS) -- Telecommunication giants China Unicom and Telefonica on Sunday announced that they have agreed to enhance their Strategic Alliance and deepen their cooperation in several areas.

The companies' strategies include cooperation in areas such as procurement, mobile service platforms, service to MNCs, wholesale carriers, roaming, technology, among others, where both companies have been cooperating since the signature of their Strategic Alliance Agreement.

Additionally, China Unicom - which is present 31 provinces, municipalities and autonomous regions in the world's most populated country, China - and Telefonica - which operates in 25 countries with a customer base exceeds 280 million globally - have strengthened their Strategic Alliance with a new mutual investment pursuant to which the parties agreed to increase their respective stakes by acquiring the equivalent of $500 million in the other party through the purchase of each party's shares.

China Unicom will raise its interest through the acquisition of 21,827,499 Telefonica shares at an agreed value of 17.16 Euros per share. The criteria employed in determining the share price was the arithmetic average of closing prices for the thirty consecutive trading days ending on January 14, consistent with the criteria applied at the first share exchange agreement entered into between Telefonica and China Unicom in 2009.

In turn, Telefonica will buy from third parties the China Unicom shares to be completed within the next 9 months. Once completed, Telefonica will increase its interest in China Unicom to around 9.7 percent, assuming current share prices, and China Unicom will have a 1.37 percent stake in Telefonica.

Furthermore, the Board of Directors of Telefonica will propose at the next General Shareholders' Meeting the appointment of a new member of the Board of Directors representing China Unicom.

The agreement signed on Sunday follows the one reached back in 2009, where the two companies invested $1 billion in the other party's shares and entered into a Strategic Alliance Agreement.

"We are very pleased to further strengthen our relationship with China Unicom," Telefonica's Chairman Cesar Alierta said.

"With a combined customer base of 590 million accesses, approximately 10 percent of the world's population, this new step in our strategic alliance reinforces our leadership position and provides us with an exceptional springboard to continue to compete globally in the best conditions ever and jointly lead the new digital world, benefiting both our shareholders and customers."

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