China's internet titans are among the companies joining in a government-encouraged plan to pump $11.7 billion into state-owned telecom giant China Unicom (Hong Kong) Ltd.
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 will sell 10.9 billion shares to domestic companies including technology flagships Tencent Holdings Ltd., Baidu Inc. and Alibaba Group Holding Inc., as well as ride-hailing company Didi Chuxing, China Life Insurance Co. and online retailer JD.com Inc.
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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 will reduce the stake held by Unicom's state-owned parent to 37% from 63%, with the new investors holding 35%.
The money raised will go to upgrade the company's telecom networks and help it launch next-generation 5G technologies, China Unicom said.
The telecom overhaul is part of China's broader plan to reform its sprawling state-owned companies and goose a slowing economy. Despite a thriving landscape of private companies, particularly in the technology sector, state companies dominate significant portions of its economy, notably such strategic sectors as telecommunications and energy.
China Unicom announced the new ownership structure as part of its earnings report for the first half of the year. It said net profit was up 70% to 2.4 billion yuan ($360 million), though operating revenues fell 1.5% to 138.2 billion yuan ($20.6 billion).
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(END) Dow Jones Newswires
August 16, 2017 08:50 ET (12:50 GMT)