China Unicom's 2017 mixed-ownership deal raised 78bn yuan from Tencent, Alibaba and Baidu

China Unicom, the country's second-largest mobile carrier, was widely seen as the weakest of the three state telecoms: lower margins, a slower 4G buildout and weak digital businesses. In 2017 Beijing picked it for the first group-level mixed-ownership reform of a central state enterprise, and the National Development and Reform Commission approved the plan (China Daily).

On August 16, 2017 the company unveiled the deal: strategic investors would take about 35% of Shanghai-listed China United Network Communications. Tencent invested 11bn yuan (5.18%), Baidu 7bn yuan (3.30%), Alibaba 4.3bn yuan (2.04%) and JD.com 5bn yuan (2.36%), with China Life, Suning, Didi Chuxing and funds filling the rest (China Daily; HKEX announcement).

The structure: investors paid CNY61.73bn for 9bn new A-shares, parent China Unicom Group sold 1.9bn existing shares for CNY12.98bn at the same price, and employees received a CNY3.21bn restricted-share plan - about 78bn yuan (US$11.7bn) in total (Dow Jones via Fox Business).

CEO Wang Xiaochu called it "a historic opportunity" to improve management with diversified shareholders and said Unicom would cooperate with the investors in retail systems, payment and cloud computing.

About 78bn yuan (US$11.7bn): CNY61.73bn for 9bn new A-shares, CNY12.98bn for 1.9bn parent shares and CNY3.21bn employee plan; investors took ~35%.

Bringing in internet giants gave Unicom capital and access to their retail, payment, cloud and content ecosystems.

A ~35% private stake changed governance and incentives without surrendering state control.

The employee share plan aligned management with the turnaround.

Being the first group-level mixed reform made Unicom the reference case for later pilots.

The first group-level mixed-ownership reform traded a big minority stake for capital and cooperation: Unicom kept state control while internet giants became shareholders, customers and partners.

Unicom's A-shares resumed trading on August 21, 2017 and rallied after the plan. The company used the funds to accelerate 4G and 5G buildout and to build an industrial-internet business. Later mixed-ownership pilots cited the Unicom deal as the template, although the operational payoff from the internet investors took years to show up in earnings.