China Unicom and Telefonica Strengthen Their Strategic Alliance and Agree on a New Mutual Investment

BEIJING and MADRID, Jan. 23, 2011 /PRNewswire/ -- China Unicom and Telefonica have agreed to enhance their Strategic Alliance, and to deepen their cooperation in areas such as procurement, mobile service platforms, service to MNCs, wholesale carriers, roaming, technology, among others, where both companies have been cooperating since the signature of their Strategic Alliance Agreement.

Additionally, China Unicom and Telefonica have strengthened their Strategic Alliance with a new mutual investment pursuant to which the parties agreed to increase their respective stakes by acquiring the equivalent of US$500 million in the other party through the purchase of each party's shares. China Unicom will raise its interest through the acquisition of 21,827,499 Telefonica shares at an agreed value of 17.16 Euros per share. The criteria employed in determining the share price was the arithmetic average of closing prices for the thirty consecutive trading days ending on 14 January 2011, consistent with the criteria applied at the first share exchange agreement entered into between Telefonica and China Unicom in 2009. In turn, Telefonica will buy from third parties the China Unicom shares to be completed within the next 9 months. Once completed, Telefonica will increase its interest in China Unicom to around 9.7%, assuming current share prices, and China Unicom will have a 1.37% stake in Telefonica.

Furthermore, the Board of Directors of Telefonica will propose at the next General Shareholders' Meeting the appointment of a new member of the Board of Directors representing China Unicom.

The agreement signed today follows the one reached back in 2009, where the two companies invested US$1 billion in the other party's shares and entered into a Strategic Alliance Agreement.

The agreement was signed by the operators' respective chairmen, Mr. Chang Xiaobing and Mr. Cesar Alierta.

After the signing of the agreement, Mr. Chang Xiaobing, Chairman of China Unicom, commented that, "Since the signing of the Strategic Alliance Agreement by China Unicom and Telefonica in September 2009, the strategic cooperation between the two parties has been fruitful and we are satisfied in this regard. On the basis of existing cooperation, both parties have decided to enhance our strategic alliance by further investing in each other's shares and deepening existing cooperation. We believe that the enhancement of strategic alliance will promote the competitive advantages of both parties and maximize shareholders' return."

Telefonica's Chairman Mr. Cesar Alierta emphasized that, "We are very pleased to further strengthen our relationship with China Unicom. With a combined customer base of 590 million accesses, approximately 10% of the world's population, this new step in our strategic alliance reinforces our leadership position and provides us with an exceptional springboard to continue to compete globally in the best conditions ever and jointly lead the new digital world, benefiting both our shareholders and customers."

About Telefonica

Telefonica is one of the world's largest telecommunications companies by market cap. Its activities are centered mainly on the fixed and mobile telephony businesses, while its broadband business is the key growth driver underpinning both.

It operates in 25 countries and its customer base exceeds 280 million globally. Telefonica's growth strategy is focused on the markets in which it has a strong foothold: Spain, Europe and Latin America.

Telefonica is a 100% private company, with more than 1.5 million direct shareholders. Its share capital consists of 4,563,996,485 ordinary shares traded on the continuous market on the Spanish Stock Exchanges (Madrid, Barcelona, Bilbao and Valencia) and on those of London, Tokyo, New York, Lima, Buenos Aires and Sao Paulo.  

If you would like to know more about the Telefonica, please visit www.telefonica.com

About China Unicom

China Unicom (Hong Kong) Limited ("the Company") was incorporated in Hong Kong in February 2000 and was listed on the New York Stock Exchange and the Stock Exchange of Hong Kong on 21 June 2000 and 22 June 2000 respectively. On 1 June 2001, the company was included as a constituent stock of the Hang Seng Index.

At present, China Unicom is engaged in GSM and WCDMA cellular business in 31 provinces, municipalities and autonomous regions in China, the provision of fixed-line voice, broadband and other Internet-related services, information and communications technology services, business and data communications services, and other related telecommunication value-added businesses.

As of 31 December 2010, China Unicom had 167 million mobile subscribers, 96.6 million local access subscribers, and 47 million broadband subscribers.

If you would like to know more about China Unicom, please visit www.chinaunicom.com.hk.

Disclaimer:

China Unicom and Telefonica would like to caution readers about the forward-looking nature of some of the statements in this press release. These forward-looking statements are subject to various risks and uncertainties, including future changes in our competitive and regulatory environment, future growth rates of the Chinese economy and its telecommunications industry, changes in telecommunications-related technologies and applications and other factors that will affect the execution of our business plans and strategies.

SOURCE China Unicom (Hong Kong) Limited

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