Telefonica of Spain Sells $860 Million Stake in China Unicom

Telefonica SA sold half of its remaining 5 percent stake in China Unicom (Hong Kong) Ltd., the nation’s second-largest mobile-phone carrier, for about HK$6.66 billion ($860 million).

Spain’s biggest phone company sold 597.8 million China Unicom shares at HK$11.14 each, a 3 percent discount to the stock’s closing in Hong Kong, the Madrid-based carrier said in a statement yesterday. Bank of America Corp. is the sole bookrunner, according to terms of the transaction seen by Bloomberg News.

In the past two years, Telefonica has made acquisitions in countries such as Germany while selling businesses in smaller markets including Ireland and the Czech Republic. Telefonica, Europe’s largest investor in Latin American telecommunications, agreed in September in buy Vivendi SA’s Brazilian broadband unit GVT for about $9 billion.

Shares of China Unicom have fallen 1 percent this year, compared with the 1.9 percent rise in the benchmark Hang Seng Index. The stock closed at $11.48 in Hong Kong yesterday. Telefonica rose 1.6 percent to 12 euros in Madrid.

Telefonica’s venture in China dates back to 2005, when the Spanish company, under Chief Executive Officer Cesar Alierta, bought 2.99 percent of China Netcom Group Corp. (Hong Kong) Ltd. for $292 million, data compiled by Bloomberg show. The stake was raised to 5 percent in September that year. Unicom acquired China Netcom Group Corp. in 2008 and in 2011, Telefonica further increased its stake in China Unicom to almost 10 percent.

Then in June 2012, Telefonica sold almost half of its China Unicom shares for about $1.4 billion.

The remaining 5 percent stake in China Unicom has a carrying value of 1.54 billion euros, according to Telefonica’s 2013 annual report.

In its statement, Telefonica said it remains committed to its strategic alliance with China Unicom.

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