The company and Telefonica shall establish a broad strategic alliance and shall explore possible areas of strategic co-operation which would confer mutual benefit to both parties, China Netcom’s chairman Zhang Chunjiang said in a statement to the Hong Kong Stock Exchange.
China Netcom said the deal will include provision of fixed-line, broadband, domestic and international long-distance communications, data, value-added, and mobile voice services to individual customers and corporate clients in China. It will also include exchanging technical and operational expertise and resources. It is also thought the chairmen of both companies will meet regularly to discuss possible areas of co-operation.
At the end of June Telefonica purchased a 2.99% stake in the Chinese fixed-line operator for approximately 240m euros ($289m) and it is thought it wants to increase this stake to 5% so it can appoint a board member to the carrier’s board of directors.
China Netcom is the second-biggest fixed-line carrier in China, with 80.4 million fixed-line subscribers, 15 million personal handyphone system subscribers, and 6.22 million broadband subscribers at the end of last year.
Back in January it purchased a 20% stake in Pacific Century CyberWorks Ltd, Hong Kong’s largest telecoms company, for HKD 7.9bn ($1.01bn) in cash.
Telefonica on the other hand is one of the largest telecom operators in Spain and South America, with an 140 million subscriber base.
