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State-owned China Unicom says parent reviewing mixed-ownership structure
April 6, 2017 / 3:40 AM / 6 months ago

State-owned China Unicom says parent reviewing mixed-ownership structure

Company logos of China Unicom are displayed at a news conference during the company's announcement of its annual results in Hong Kong, China March 16, 2016. REUTERS/Bobby Yip

HONG KONG (Reuters) - State-owned China Unicom Hong Kong Ltd (0762.HK) said its top shareholder China United Network Communications Ltd (600050.SS) was reviewing its ownership structure as Beijing puts pressure on telcos to bring in private investors and boost competition.

The country’s big telecommunication firms - China Unicom, China Telecom Corp Ltd (0728.HK) and China Mobile Ltd 0941.K - are all units of unwieldy state-owned enterprises.

Those parent firms are seen as overstaffed, inefficient and slow to develop key technologies, prompting the call to bring in private firms, which have shot ahead in developing cloud and big data services as well as mobile software.

China Unicom will be among the first batch of state-owned enterprises expected to introduce private shareholders in a pilot scheme of ownership reform.

The Shanghai-listed parent company will be used as a platform for the mixed ownership reform, China Unicom said in a filing to the Hong Kong bourse late on Wednesday.

“As the related plan for these matters is still under further deliberation, these matters are still subject to substantial uncertainty,” added China Unicom, in which China United Network owns a 75.94 percent stake.

Hong Kong-listed shares of China Unicom, which were halted on Wednesday, opened up 3.1 percent as trade resumed on Thursday at HK$11.2($1.44)- the highest since October 2015. But the gains were erased later with the shares down about 1 percent by 0255 GMT.

China United Network, which was also halted on Wednesday, said it will remain suspended from trading until further notice.

China Unicom, the worst-performing telco among the three state-owned firms, said in October that it was included in the pilot mixed ownership reform scheme. Last month, it reported a 94 percent drop in profit for 2016.

Analysts expect the company to face further headwinds this year due to the government’s call on telco operators to lower rates.

Reporting by Donny Kwok and Sijia Jiang; Editing by Himani Sarkar

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