Telefonica strengthens China link with China Unicom ties

Telefonica and China Unicom

Telefonica and China Unicom

Spanish telecom giant Telefonica, who own O2, have agreed to extend their deal with China Unicom in a $1billion deal.

The pair will invest $500million (£320million) each into each other’s companies. China Telecom will subsequently own 1.4% of Telefonica and Telefonica 9.7% of China Unicom.

The move, which could see China Unicom gain a seat on the Telefonica board is yet another deal between China and Europe, in what is seen as the biggest sign yet that China could be joining the world’s super powers at the economic table.

The two parties invested $1billion in each other in 2009, and have shared tenchonolgy and research in several departments. Telefonica, who hope to wrap the deal up in the next 9 months, released a statement through their chairman.

“We are very pleased to further strengthen our relationship with China Unicom,” said Telefonica’s Cesar Alierta.

“With a combined customer base of 590 million, approximately 10% of the world’s population, this new step in our strategic alliance reinforces our leadership position.”

China still has a relatively low percentage of the population using mobile phones so is an expanding market, with plenty of potential for Telefonica to grow. The company is also looking at expanding into Latin America. It’s already agreed to buy a stake in Brazil’s Vivo network from Portugal Telecom who run services in Brazil.

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