China

China Unicom to Reportedly Raise RMB 30 Bln in Mixed-Ownership Reform

Summary:

  • Rumors have surfaced in the Chinese market recently concerning the mixed-ownership reform of China Unicom (CHU.NYSE/600050.SS/0762.HK), as reported by Tencent Finance.
  • According to the report, China Unicom will issue new shares to newly-introduced investors to raise at least RMB 30 billion. The newly issued shares will equate to up to 20% of the company’s total capital after the reform.
  • China Unicom’s competitor, China Telecom (CHA.NYSE/0728.HK), might be one of the investors. Baidu (BIDU.NASDAQ), Tencent Holdings (0700.HK), and Alibaba Group (BABA.NYSE) have all expressed great interests in investing.

Why It Matters:

  • China Unicom’s mixed-ownership reform is part of the Chinese government’s initiative to introduce non-state-owned capital to current state-owned enterprises.
  • Among the three state-owned telecom operators, China Mobile (CHL.NYSE/0941.HK), China Unicom and China Telecom, China Unicom has seen the worst performance during the past 1-2 years. By introducing private investors, the government is expecting the company to become more creative and competitive.
  • Earlier, China Unicom recorded a net profit of RMB 154 million for 2016, down 96% from 2015, and its revenue for 2016 decreased 1% to RMB 274.2 billion.