China Unicom, Spain's Telefonica Expand Alliance

JOE McDONALD

BEIJING (AP) — Spanish phone company Telefonica SA and China Unicom Ltd., one of China's three main state-owned carriers, say they will expand a strategic alliance and buy $1 billion worth of each other's shares.

The companies said they will cooperate in development of technology for mobile phones, providing services to multinational customers and other areas under the agreement signed Sunday. They also plan to exchange managers, the companies said.

"We are fully committed to the alliance and will exploit the synergies offered by this far-reaching cooperation to benefit our shareholders and customers alike," Telefonica chairman Cesar Alierta said in a statement.

The companies said they would buy $1 billion worth of each other's shares based on the average closing price over the 30 trading days ending Aug. 28.

They said Telefonica's stake in Unicom would rise to 8 percent, while Unicom will become a Telefonica shareholder for the first time with a stake of approximately 0.88 percent. The Spanish company owned 5.5 percent of China Netcom Ltd., which was merged into Unicom as part of a reorganization last year.