China Unicom and Telefónica strengthen their strategic alliance and agree a new mutual investment
Date: Mon, 01/24/2011 - 13:05
China Unicom will increase its interest in Telefónica's share capital to 1.37%，while Telefónica will increase its interest in China Unicom's share capital to around 9.7%, assuming current share prices
China Unicom and Telefónica have agreed to enhance their Strategic Alliance, and to deepen their 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 and Telefónica 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 US$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 Telefónica 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 14 January 2011, consistent with the criteria applied at the first share exchange agreement entered into between Telefónica and China Unicom in 2009. In turn, Telefónica will buy from third parties the China Unicom shares to be completed within the next 9 months. Once completed, Telefónica will increase its interest in China Unicom to around 9.7%, assuming current share prices, and China Unicom will have a 1.37% stake in Telefónica.
Furthermore, the Board of Directors of Telefónica 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 today follows the one reached back in 2009, where the two companies invested US$1 billion in the other party's shares and entered into a Strategic Alliance Agreement.
The agreement was signed by the operators’ respective chairmen, Mr. Chang Xiaobing and Mr. César Alierta. After the signing of the agreement, Mr. Chang Xiaobing, Chairman of China Unicom, commented that “Since the signing of the Strategic Alliance Agreement by China Unicom and Telefónica in September 2009, the strategic cooperation between the two parties has been fruitful and we are satisfied in this regard. On the basis of existing cooperation, both parties have decided to enhance our strategic alliance by further investing in each other's shares and deepening existing cooperation. We believe that the enhancement of strategic alliance will promote the competitive advantages of both parties and maximize shareholders’ return”.
Telefónica's Chairman Mr. César Alierta emphasized that “we are very pleased to further strengthen our relationship with China Unicom. With a combined customer base of 590 million accesses, approximately 10% 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”.