Struggling telecom China Unicom gets $12 billion investment from tech companies

Thomson Reuters

Baidu and JD.com will join other big Chinese technology firms to jointly invest about $12 billion in the Shanghai-listed unit of China Unicom, the weakest of three big state-owned telecoms firms, two people with direct knowledge of the matter said.

The move is part of the Chinese government's drive to rejuvenate state behemoths with private capital. Beijing added China Unicom last year to a first batch of state-owned enterprises to see mixed-ownership reform.

China Unicom, formally known as China United Network Communications Group, is one of the world's largest mobile carriers by user numbers, but its recent earnings have struggled in a fiercely competitive market.

The carrier is widely seen as over-staffed, inefficient and slow to develop key technologies. It already lags state-owned China Mobile and China Telecom, and private firms have moved ahead in developing cloud and big data services, and mobile software.

Reuters reported last month that Alibaba and Tencent would be among new investors putting a total of about $10 billion into China United Network Communications, China Unicom's Shanghai-listed unit.

That total is likely to rise to about 80 billion yuan ($11.8 billion), with Baidu, China's biggest internet search provider, investing about 10 billion yuan ($1.48 billion), and JD.com, the country's second-largest e-commerce company, putting in about 5 billion yuan, one of the people said.

The China Unicom unit is likely to raise 15 billion yuan from Tencent and 7 billion yuan from Alibaba, while China Life Investment  would be the biggest new investor, with a 20 billion yuan commitment, that person added.

Overall, it would be the largest capital raising in the Asia-Pacific region since insurer AIA Group's 2010 initial public offering, according to Thomson Reuters data.

The majority of the capital would be raised through new share issues, while China Unicom would also sell part of its stake in the Shanghai unit, the two people said.

Both sources declined to be identified as the talks are not public.

NOW WATCH: China is spending $168 million on weather-controlling technology