China Unicom discusses privatisation with strategic investors

The telco company is the first to roll out the government’s ‘mixed-ownership reform’, which could see part of its capital land in private hands.

China Unicom, the world’s sixth-largest mobile network operator, could be one of the first state-owned companies to bring in capital via a private placement in a test of key government reforms. 

The telco company has been in talks with potential strategic investors and has not signed any binding agreements yet, it said in a filing at the Shanghai Stock Exchange on Sunday. It added that the list of potential investors and terms regarding the potential transaction will require further approval from relevant government authorities.

Alibaba and Tencent, two Chinese tech companies, are said to be leading a group of Chinese investors including Baidu and that is considering a joint $12 billion equity injection into China Unicom, according to reports. China Unicom denied such discussions were taking place. 

The Shanghai-listed telco group, which had 268.3 million mobile subscribers at the end of May, has been competing with two other larger state-owned competitors, China Mobile and China Telecom, for a slice of China’s highly regulated telecom market. 

Over the past few months, the National Development and Reform Commission selected China Unicom and 18 other state-owned enterprises to form the first two batches that will implement the government’s mixed-ownership reform, which aims to improve efficiency and equity structures at SOEs by introducing private capital.

The economic planner is now screening companies to form the third batch of part-privatised SOEs. In addition to telecoms, other pilot industries under the reform scheme include the railway, petroleum, natural gas, electricity, civil aviation and defence sectors. 

The Chinese government expects to remain a majority shareholder in privatised SOEs.