SK Telecom Archives ~ Business China : news for investors in China

TELECOMS: Unicom Seeks New Life with BAT Magic

By newsdoug on December 1, 2016

Bottom line: Unicom is likely to choose all 3 of the BAT companies as equity and strategic partners under Beijing’s pilot program to invigorate big state-run companies, but none of the tie-ups will produce meaningful results.

China Unicom (HKEx: 762; NYSE: CHU), the perennial laggard among China’s 3 major telcos, is reportedly looking for new life by tying up with the nation’s big 3 Internet companies, Tencent (HKEx: 700), Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). I might normally say “so what?” to this particular development, since it seems like Unicom and its 2 fellow state-run telcos are regularly announcing this kind of partnership, always with little or no meaningful impact on their business. Read Full Post…

TELECOMS: Telefonica Nears Divorce with China Unicom

By newsdoug on July 11, 2016

Bottom line: Telefonica is likely to finalize its divorce with Unicom in the next 2 years, following the latest halving of its holdings in its Chinese partner to 1 percent as part of a sell-down of non-core assets.

For some reason that’s not completely clear to me, Spanish telco Telefonica (Madrid: TELF) doesn’t want to admit that its decade-long marriage with China Unicom (HKEx: 763; NYSE: CHU) was a dud and is headed for divorce. That’s my latest assessment, following reports that the Spanish carrier has further sold down its stake in its Chinese partner, leaving it with a miniscule 1 percent of Unicom’s shares. This particular sale was probably driven mostly by a need for cash. But I really don’t understand why Telefonica didn’t just completely dump the rest of its shares and finally end this marriage that never produced anything useful for either side. Read Full Post…

E-COMMERCE: Alibaba in Korean Cloud, Ant Flooded in Funds

By newsdoug on April 27, 2016

Bottom line: Alibaba’s new cloud tie-up shows that Korea is a primary market for its global expansion, while the new $4.5 billion funding for its Ant Financial affiliate could be followed by an IPO within the next 12 months.

E-commerce giant Alibaba (NYSE: BABA) is in a couple of major headlines today, led by word that its Ant Financial affiliate has just raised a whopping $4.5 billion in only its second-ever funding round. That particular story has been rippling through the headlines for a few weeks now, and is most notable because the deal is finally done and is triple the company’s original fund-raising target.

The other headline has Alibaba itself in a new deal to launch cloud computing services in South Korea, working in a partnership with a unit of local telecoms giant SK Telecom (Seoul: 017670). This particular deal is interesting because it represents Alibaba’s recent search for global growth stories, in a bid to satisfy investors worried about a slowdown in its home China market. Read Full Post…

TELECOMS – China Telcos Oraphaned As Telefonica Dumps Unicom

By newsdoug on November 11, 2014

Bottom line: Telefonica’s sell-down of its Unicom stake presages an exit from the investment next year, ending a decade of failed tie-ups by foreign telcos looking to tap the Chinese telecoms services market.

Telefonica halves Unicom stake

Chinese telco shares may look like a good bet for small investors hoping to profit from company stock gains, but they’re a clear dud for foreign carriers hoping to profit from China’s huge but highly protected telecoms market. That’s my latest assessment following word that Spain’s Telefonica (Madrid: TELF) is further selling down its stake in China Unicom (HKEx: 762; NYSE: CHU), in what looks like a prelude to a complete exit from this problematic investment.

If Telefonica does indeed completely dump Unicom, it would mark the end of a decade-long courtship that saw some of the world’s top telcos invest heavily in their Chinese counterparts. All of those investments ended in divorce, with the foreign carriers selling their shares when they failed to get any strategic benefits from the tie-ups. Read Full Post…

Virtual Networks Coming in 2013 虚拟运营商或于明年进入中国电信市场

By newsdoug on December 27, 2012

China to allow VNOs The Chinese media have been buzzing these last few days with word that the telecoms regulator will soon roll out a highly anticipated plan to allow virtual network operators (VNOs) into China in 2013, finally breaking the monopoly on telecoms services held by the nation’s 3 major telcos. Such a move could suddenly open the door for homegrown companies like Tencent (HKEx: 700) and Sina (Nasdaq: SINA) to offer specialized services over their own privately branded virtual networks, but would also open the door for bigger global names like France Telecom (Paris: FTE) and AT&T (NYSE: T) to enter the long-closed market.

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China Eyes Mobile Internet Investment 中国或将开放移动互联网市场

By newsdoug on August 24, 2012

Telecoms regulator's newest opening signals New signals coming from Beijing indicate the mobile Internet could be the first area of China’s telecoms sector to open to foreign investment, following years of an informal ban on outside investment in the sensitive space. The new signs, coming from the telecoms regulator, would be consistent with recent moves over the past year that have seen Beijing officially approve new China-based cloud computing ventures backed by US technology giants IBM (NYSE: IBM) and Microsoft (NYSE: MSFT), both of which have an Internet focus.

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Telefonica Sells Unicom Stake, More to Come 西班牙电信出让中国联通股份，更多此类事件将发生

By newsdoug on June 11, 2012

Telefonica sells down Unicom stake The Eurozone debt crisis is starting to offer some interesting M&A opportunities for cash-rich Chinese firms, as reflected by the decision by leading Spanish telco Telefonica (Madrid: TELF) to sell half of its stake in China Unicom (HKEx: 762; NYSE: CHU) to raise desperately needed cash. (English article) This development comes as Spain became the latest Eurozone nation to request a bailout for its banks over the weekend. As the crisis builds, a growing number of cash-strapped companies like Telefonica are selling off assets, providing an opportunity for outward-looking Chinese firms to pick up some interesting bargains. Let’s look at this latest news, which has Telefonica selling 4.6 percent of its stake in Unicom, China’s second largest telco, back to Unicom’s state-run parent for $1.4 billion. (English article) Telefonica previously purchased about 10 percent of Unicom several years ago following a reorganization of China’s telecoms industry, calling the purchase part of its broader global strategy to move into more developing markets. Clearly the Eurozone debt crisis has become a more pressing issue since then, with Telefonica selling off the Unicom stake together with several of its other assets to raise money as conditions rapidly deteriorate in its home market. Telefonica will still own about 5 percent of Unicom after this latest sale, but I wouldn’t be surprised if it soon sells that remaining stake as well. Long-time followers of Unicom will recall that the company had to choose between Telefonica and South Korea’s SK Telecom (Seoul: 017670) in picking a foreign strategic investor after the industry’s restructuring 3 years ago. It ultimately decided on Telefonica, but this latest sale could perhaps see SK Telecom or another major Asian telco come in and take over as a new strategic investor, which Unicom desperately needs as it struggles to develop its underutilized state-of-the-art 3G network. Meantime, this sale also signals a potential new wave of interesting M&A opportunities could soon be coming for Chinese firms looking to expand globally. The sale comes just 2 weeks after another similar deal saw China’s State Grid, the country’s largest power grid operator, buy power transmission assets in Brazil from another Spanish company, ACS (Madrid: ACS) for $531 million and the assumption of another $411 million in debt. (previous post) Both of these deals send a similar message, namely that debt-heavy European companies are starting to feel a growing burden from the worsening Eurozone crisis, forcing companies in some of the hardest hit countries to start selling off assets. We could easily see many more similar assets being quickly sold in the months ahead, especially from companies in the hardest hit countries of Spain, Greece, Ireland and Portugal, all of which have either already sought bailouts or are likely to need them soon. Spain and Portugal probably offer the most interesting opportunities for Chinese companies, as these 2 countries own lots of assets in developing Latin American markets that might be of particular interest to Chinese firms. Accordingly, look for more such deals in the months ahead, with companies from infrastructure-related industries like telecoms, and the power and energy sectors most likely to offer the most interesting deals.

Bottom line: Telefonica’s sale of its China Unicom stake reflects a rising debt burden faced by Eurozone companies, which are likely to sell off more assets to Chinese firms in the months ahead.

China Telecom Opens Door for Foreign Telcos 中国电信在英国推出MVNO业务或为外国电信企业进入中国铺路

By newsdoug on May 24, 2012

The headlines are buzzing today with new of the formal launch of the first virtual mobile network by a Chinese telco outside China, with China Telecom (HKEx: 728; NYSE: CHA) partnering with European mobile carrier Everything Everywhere to offer service in the United Kingdom. (English article; Chinese article) But from my perspective, the much more interesting proposition could be that this move might finally mean that Chinese telcos themselves are open to this kind of deal, potentially paving the way for one of the big foreign telcos to finally enter China as a mobile virtual network operator (MVNO). Such MVNOs let companies quickly enter foreign markets by offering service under their own brand over an existing carrier’s network. Let’s look at the latest news first, which saw the official launch this week of China Telecom’s new service, called CTExcelbiz, following an initial announcement of its plan to become an MVNO in Britain back in January. (previous post) Under that previously announced plan, China Telecom said it would launch service in Britain first, targeting the growing number of Chinese living and traveling to Europe, and then potentially draw on Everything Everywhere’s ties to France and Germany to expand to those markets. From the China perspective, this move by China Telecom, the smallest of China’s 3 mobile carriers, seems to indicate that the company itself might be open to partnering with a foreign telco in its home China market for a similar MVNO. Such a partnership would quickly give China Telecom a potentially big new revenue source from its foreign partner, and would allow it to make better use of its relatively underutilized state-of-the-art 3G network. The Chinese telecoms regulator also said earlier this year it wants to open the market more to infrastructure investment by foreign companies (previous post), so allowing foreign MVNOs into the market would help to meet that aim, and also give China’s telcos access to foreign technology and services that can take advantage of their 3G networks. Britain’s Virigin Mobile (London: 1044Q), one of the world’s most successful MVNO operators, was reportedly in talks to form an MVNO in China in the mid-2000s, but no deal was ever announced. Much has changed since then, most notably a reorganization of China’s mobile sector, the launch of 3G networks, and an increasing openness by Beijing to let foreign investment into the sensitive telecoms infrastructure space. If China Telecom’s move signals an opening of the market to foreign MVNOs, there are certainly a number of operators that would be interested. One of Everything Everywhere’s major stakeholders, France Telecom (Paris: FTE), has shown previous interest in China, as has European giant Vodafone (London: VOD), South Korea’s SK Telecom (Seoul: 017670) and Spain’s Telefonica (Spain: TEF). With all those carriers interested in China and China’s own increasing openness, I wouldn’t be surprised to see an announcement of the first MVNO in China by a foreign telco in the next 18 months, most likely with China Telecom as a launch partner.

Bottom line: China Telecom’s move into Britain means Beijing may soon let foreign telcos enter China as mobile virtual network operators, with a first deal possible in the next 18 months.