China Unicom Denies Investment Deals With Tencent, Alibaba

(Beijing) — China Unicom, one of the country’s big three state-owned telecom operators, denied reports that it would receive investments from private tech giant Alibaba Group and Tencent Holdings as part of the company’s long-awaited mixed-ownership reform plan.

China Unicom confirmed Tuesday that it set up e-commerce operating centers with Alibaba and Tencent in May but said the partnerships were not related to the ownership reform plan.

News of China Unicom’s partnership with Alibaba and Tencent fueled speculation last week that the two internet giants would inject capital into the country’s second-largest telecom operator and become new shareholders.

The telecom company is set to be a pilot for the so-called mixed-ownership reform as part of China’s broader plans to introduce more private investors into state-owned enterprises. Recent media reports have speculated that Chinese tech majors, also including search giant Baidu and Alibaba’s rival JD.com, are lining up to invest a total of $10 billion in the telecom operator.

China Unicom said Tuesday that the operating centers were set up as internal divisions to liaise with internet companies such as Alibaba and Tencent, amid a broader push to establish an integrated e-commerce operating system.

The National Development and Reform Commission, the central economic planning agency under the State Council, has approved China Unicom’s ownership reform plan, the company said last week. The company is still negotiating with potential investors and has not entered into any binding agreements, but it expects to announce a deal soon, China Unicom said.

Caixin has learned that the potential investors would include not only internet companies but also financial companies and industry investment funds.

A senior executive at China Unicom told Caixin that the mixed-ownership reform would help Unicom’s cooperation with internet companies, but it doesn’t necessarily mean all the internet companies China Unicom has partnered with would become shareholders.

China Unicom had 269 million subscribers at the end of June, including 138.8 million 4G customers. Those totals were far behind No. 1 China Mobile, with 866.5 million customers at the end of June, 593.65 million of which were 4G customers. In April, the company reported an 88% rise in net profit for the first quarter, but its revenue fell 1.9% from the previous year.