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Nikkei Markets

China Unicom may list internet of things unit, chairman says

Announcement of possible move follows investment by major Chinese carmakers last month

China Unicom's mobile services revenue shrank 6.6% to 78.7 billion yuan in the quarter. (Photo by Takaki Kashiwabara)

HONG KONG (Nikkei Markets) -- Wireless carrier China Unicom is considering a potential listing of its connected devices unit China Unicom Smart Connection Technology after receiving investment from country's largest automobile makers, as the world's second-largest economy gears up for the rollout of fifth-generation internet services, its chairman said on Friday.

Following A-round financing from nine strategic investors, the internet of things unit, which will focus on developing core technology for cars, may "need B-round financing or go for a listing on the science and technology innovation board," Wang Xiaochu said at a press conference after the annual meeting.

Last month, major automobile companies state-owned FAW group, Dongfeng and Guangzhou Automobile Group, among others, picked up stakes in the IoT unit. Following the investment, China Unicom's stake in Smart Connection Technology fell to 68.9% from 100%.

Major Chinese telecom companies are preparing for the commercial launch of 5G networks, which is expected to bring internet speeds up to 100 times faster than speeds on 4G networks.

Amid Beijing's efforts to foster a data- and technology-driven economic growth, the government has urged telecom companies to reduce the average broadband fee for small and medium enterprises by 15% and data fees by 20% this year.

Unicom's average revenue per mobile phone user (ARPU) fell 14% in the first quarter to 41.2 yuan ($6.05) from a year earlier as the company, along with China Mobile and China Telecom, respond to the government's call to slash costs for hundreds of millions of end users and businesses.

Mobile user ARPU will not have a "steep cut" this year, Wang said. In 2018, Unicom's ARPU fell to 45.7 yuan from 48 yuan a year before.

On Thursday, the U.S. Federal Communications Commission denied China Mobile's application to provide telecommunications services between U.S. and foreign destinations, citing national security concerns as trade tensions persist between the two countries.

"Our operation in the U.S. has received normal license. We are mostly providing services to multinational corporations with offices in both the U.S. and China," Wang said. Unicom is listed in New York as well as Hong Kong.

Top officials from the U.S. and China concluded the first day of trade talks on Thursday on a trade deal as Washington more than doubles tariffs on $200 billion of Chinese imports to 25% from 10%.

Unicom's Hong Kong-listed shares rose 0.5% to HK$8.87 ahead of the midday break on Friday. The city's benchmark Hang Seng Index gained 0.6%.

-Benny Kung

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