Tencent, China Unicom get approval for joint venture

HONG KONG (Reuters) -Tencent Holdings and state-owned telecommunications company China Unicom have received regulatory approval to set up a joint-venture company, a public document showed on Wednesday.

The State Administration for Market Regulation approved the application, based on a list it published on its website.

The regulator first disclosed details of the as yet unnamed company in September, when it published a document describing it as an entity focused three areas: internet data centres, content delivery networks and edge computing, which is the use of augmented reality and machine learning to analyse bulk data.

Unicom Innovation Venture Capital, a subsidary of China Unicom, will control 48% of the new company while the Shenzhen Tencent Industry Venture Capital, a subsidary of Tencent, will control 42%, based on the document published in September. The additional 10% will go to the company’s employees, this document said.

In a statement released on Wednesday evening, China Unicom said the joint venture was formed to fulfill the company’s “strategic need to comprehensively foray into the digital economy”. It said that Tencent is a long-term strategic investor in the Unicom Innovation Venture Capital.

China Unicom also added that the joint venture is still in the process of being established and it does not have an impact on China Unicom’s current business.

China Unicom shares surged 10% in Shanghai late on Wednesday, prompting a temporary trading suspension. Trading in its Hong Kong-listed shares had ended before the news emerged as the stock market there closed early due to a typhoon.

Tencent’s shares rose 1.4% in Hong Kong in afternoon trading.

Chinese media has earlier described the venture as a “mixed ownership reform” company.

China Unicom did not respond to such a description in its statement. Tencent declined to provide immediate comment.

(Reporting by Josh Ye; Editing by Edwina Gibbs, Jane Merriman and Louise Heavens)

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