China Unicom parent seeks private investment

China Unicom’s parent company China United Network Communications plans to open up to private investors in response to government pressure to reform the ownership structure and competitiveness of the market’s big three operators.

The company plans to welcome in a strategic private sector investor as part of a pilot designed to evaluate having subsidiary China Unicom operate more like a private company.

China Unicom itself is listed on the Hong Kong stock exchange along with rivals China Mobile and China Telecom, but China United Network Communications owns a controlling 75.9% stake in the company.

As the least profitable of China’s big three operators – Unicom reported a 94.1% slump in net profit for 2016 – the government has selected Unicom to pilot the mixed ownership reform model.

The operator has already taken steps towards becoming a leaner, more competitive company. Unicom cut its planned capex budget to 45 billion yuan ($6.52 billion), from 72.1 billion yuan last year, to ensure it has the resources needed to fund its 5G rollout once the technology launches.

The pilot of a mixed ownership model forms part of the government’s wider plans for state-owned enterprise reform. The government has previously announced that substantial reforms will be needed across seven industries including the telecoms sector.