Spanish mobile carrier Telefonica is reducing its stake in China Unicom in a move to reduce its debt.
The company has agreed to sell 1. 07 billion shares, or 4.56%, of its stake back to the Chinese operator’s parent, China United Network Communications Group Company Limited for HK$10.21 (€1.04) per share. The deal is tipped to clear Chinese regulators by end-July, and will net Telefonica nearly HK$11 billion.
Telefonica will remain the second-largest shareholder of the company with 5.01% of shares, while Unicom parent, China United, will now hold 76.52% of the firm, up from 71.97%. Telefonica chairman Cesar Alierta will retain a seat on the Unicom board, while Chang Xiaobing, chairman of China Unicom, will continue to be a director of Telefonica.
The Spanish incumbent has also promised not to sell any more Unicom shares for the next 12 months, noting in a statement that it remains committed to its strategic alliance with Unicom. The sale, it states, reflects a "decision to manage pro-actively its asset portfolio and will allow Telefonica to increase its financial flexibility.”