China Unicom follows iPhone deal with Telefonica pact

Just weeks after signing a deal to sell iPhones in China, China Unicom moved to secure its relationship with Telefónica by agreeing to invest in the Spanish company and expand several existing arrangements.

China Unicom will pay around $1 billion for a 0.88 percent stake in Telefónica and the Spanish telecommunications company will increase its investment in China Unicom by around $1 billion to an 8 percent stake, from 5.38 percent currently, the two companies said in a joint statement.

The companies also expanded a strategic alliance meant to deepen their business dealings, including joint work on network and technology development, joint acquisition of infrastructure and equipment for customers, joint development of wireless service platforms, joint work to provide services to multinationals, mobile phone roaming, and sharing of technical, management and operational expertise.

The companies believe that their markets give them an advantage globally. Telefónica boasts over 264 million subscribers in Spain, Europe and Latin America, while China Unicom has 141 million mobile phone subscribers as well as subscribers to fixed lines and broadband Internet service in China.

Telefónica first gained a stake in China Unicom last October, after the company took over China Netcom, which Telefónica owned a stake in since 2005. China Unicom and Telefónica both run 3G (third generation mobile telecommunications) networks with WCDMA (wideband code division multiple access) technology.

China Unicom signed a 3-year deal with Apple just over a week ago to become the first Chinese carrier to sell iPhones in China.

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