Feeds

Telefonica steps back from China as debts mount

Reduces stake in China Unicom by half

Secure remote control for conventional and virtual desktops

Spanish network giant Telefonica revealed just how much financial trouble it may be in after it was forced to sell half of its shares in China Unicom back to China’s number two telco.

Telefonica will remain a major shareholder in the Chinese company with a 5.01 per cent stake, but is set to cash in on 4.56 per cent to the tune of around HK$11bn (£911m), according to a filing with the Hong Kong Stock Exchange on Sunday.

“The deal reflects [Telefonica's] ... decision to manage pro-actively its asset portfolio and will allow Telefonica to increase its financial flexibility," the firm said in a statement.

Telefonica remains committed to its partnership with China Unicom and won’t sell any further shares for at least 12 months, the filing said.

However, the future remains far from bright for O2’s parent company. Its Q1 earnings fell 54 per cent year-on-year to €748m (£607m), while revenue stayed virtually the same at €15.5bn (£12.6bn).

As if that wasn’t bad enough, debt ratings agency Standard & Poor's reduced its rankings for the firm last month, from BBB+ to BBB, just two steps above “junk bond”.

The move to reduce its China Unicom stake is another indicator of just how difficult it is for western players to survive and thrive with partnerships in the People’s Republic, despite the huge potential of the fast-growing market.

Vodafone pulled out of its tie-up with China Mobile in 2010, selling a 3.2 per cent stake for $6.5bn.

As the debt crisis continues in Europe, the state-run Chinese operators with their deep pockets and strong domestic businesses are now more likely to invest in partnerships with, or even acquisitions of, their foreign counterparts. ®

Intelligent flash storage arrays

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
The hidden costs of self-signed SSL certificates
Exploring the true TCO for self-signed SSL certificates, including a side-by-side comparison of a self-signed architecture versus working with a third-party SSL vendor.
Top 5 reasons to deploy VMware with Tegile
Data demand and the rise of virtualization is challenging IT teams to deliver storage performance, scalability and capacity that can keep up, while maximizing efficiency.