China’s internet titans are among the companies joining in a government-encouraged plan to pump US$11.7 billion into state-owned telecommunications giant China Unicom (Hong Kong) Ltd., the Wall Street Journal reports.
Beijing has said it wants government-owned companies to open themselves to more private investment, with the goal of becoming more competitive and innovative.
On Wednesday, China Unicom became the first of the three state-owned telecom companies to announce its plan for doing so: It intends to sell 10.9 billion shares to domestic companies including technology giants Tencent Holdings Ltd., Baidu Inc. and Alibaba Group Holding Inc., as well as China Life Insurance Co., ride-hailing company Didi Chuxing and online retailer JD.com Inc.
China Unicom said it hopes bringing its ownership structure more in line with “market-oriented principles” will “unleash new vibrancy” in the company. The sale would reduce the stake held by Unicom’s state-owned parent to 37 percent from 63 percent, with the new investors holding 35 percent.
The money raised would go to upgrade the company’s telecommunication networks and help it launch next-generation 5G technologies, according to China Unicom.
The telecom changes are part of China’s broader plan to overhaul its sprawling state-owned companies and stimulate a slowing economy. Despite a thriving landscape of private companies, particularly in the technology sector, state companies dominate significant parts of the country’s economy, notably the telecom and energy sectors.
China Unicom announced the new ownership structure as part of its first-half earnings report. The company said its net profit rose 70 percent to 2.4 billion yuan (US$360 million), though operating revenue fell 1.5 percent to 138.2 billion yuan (US$21 billion).
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