Reports emerged recently claiming that Chinese tech giant Alibaba and state-owned China Telecom signed a strategic cooperation agreement on November 2, involving collaboration on platform-based smart city technology, digital governance and other fields. However, China Telecom stated on November 3 that this news is totally false.
The rumors are related to the official approval granted this week to Tencent and China Unicom, another state-owned communications giant, to establish a joint venture. On November 2, an official document released by China’s Anti-Monopoly Bureau under the State Administration for Market Regulation showed that Tencent and China Unicom have gained unconditional approval to establish the joint venture. This entity will be jointly controlled by subsidiaries of these two firms, namely Shenzhen Tencent Industry Venture Capital and Unicom Innovation Venture Capital. It will be mainly engaged in the content delivery network (CDN) field and edge computing.
This news triggered extensive discussion on the mixed-ownership reform of state-owned enterprises in fields exhibiting monopolistic tendencies, and it also brought Tencent, JD.com, Alibaba and China’s three major telecoms operators (China Unicom, China Mobile and China Telecom) into the center of public attention. Also affected by the news, the share prices of Tencent and China Unicom rose sharply.
On the evening of November 2, China Unicom issued a statement, claiming that the new joint venture is in the process of establishment, and registration has not yet been completed. It has no significant impact on the current production and operation of the company. In the long run, it is conducive to amplifying the advantages of both sides and expanding the CDN and edge computing industry chain.
In fact, it is a long-standing and normal practice for telecom operators to cooperate with internet enterprises.
In 2017, Baidu, Alibaba, Tencent, JD.com and other Chinese internet companies jointly participated in the mixed-ownership reform of China Unicom, then established a number of joint ventures. For example, in 2018, China Unicom and Alibaba established a joint venture firm named Yunlizhihui, focusing on the digital transformation business of government and enterprises. This is also the first joint venture company established since China Unicom released its mixed-ownership reform plan. In November 2019, China Unicom and Tencent announced business cooperation in the fields of communication, cloud computing and network security. Lu Shan, Senior Executive Vice President of Tencent, also serves as a director of China Unicom.
As early as May 2017, China Telecom signed a comprehensive strategic cooperation agreement with Alibaba in Beijing based on a good business cooperation foundation and rich experience and resources in their respective fields. According to the agreement, the two sides would carry out extensive and in-depth cooperation in e-commerce, basic network and security, marketing services, cloud computing, payment, rural channels, terminals, the Internet of Things, enterprise procurement services and other fields.