China Unicom and Telefónica buy each other 1 billion dollar shares

September 6 News, China United Network Communications (Hong Kong) Co., Ltd. (hereinafter referred to as "China Unicom") and Telefónica S.A (hereinafter referred to as "Telefónica") signed the Strategic Alliance Agreement and the Equity subscription Agreement on September 6. Telefónica has increased its stake in China Unicom to about 8%. Meanwhile, China Unicom has subscribed to about 0.88% of Telefónica's shares. The deal makes two companies total 550 million users, accounting for about 8.6% of the world's population.

Under the Strategic Alliance agreement signed by both sides, China Unicom and Telefónica will deepen cooperation in the areas of joint procurement, mobile service platform development, multinational customer service, international roaming and technology research and development. At the same time, the two sides will also share the best practical experience, the establishment of strategic cooperation projects and promote the exchange of personnel in a number of areas of extensive cooperation.

Under the Equity subscription agreement, China Unicom and Telefónica will invest in each other and subscribe to a share of 1 billion US dollars per share, which is determined by the arithmetic average of the shares of both sides at the stock exchange and Madrid stock exchanges in the first 30 trading days as at August 28. By the end of the deal, China Unicom had a 0.88% per cent stake in Telefónica, while Telefónica's stake in China Unicom rose to about 8% per cent from 5.38%.

"We are pleased to see that the strategic cooperation between China Unicom and Telefónica is further deepened on the existing basis," said Xiaobing, chairman of China Unicom. All two companies are important business-wide telecom operators in their respective markets, and all operating under the WCDMA standards of the third generation of mobile communications business, we are the future cooperation between the two sides are full of expectations, I believe this cooperation will further enhance the two sides to provide users with rich communication and information application services, to create greater shareholder value. ”

"We are very pleased with this strategic partnership," said Alierta, chairman of Telefónica. This cooperation not only enhanced the leadership of two companies, but also made the total of the two sides to reach 550 million users. We have full sincerity in this strategic cooperation, will take this opportunity of in-depth cooperation to continue to tap the business synergy between the two sides to benefit both shareholders and users, enhance both business scale and diversity, thereby enhancing both sides in the provision of comprehensive solutions and best business practices in the global competitiveness. ”

As of July 31, 2009, China Unicom has increased the number of mobile phone users to about 141 million households, the number of local fixed-line users about 108 million households, broadband users about 35.72 million households. Telefónica operates in 25 countries and has more than 264 million users worldwide. The deal makes two companies total 550 million users, accounting for about 10% of the world's population.