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BEIJING, November 2 (TMTPOST) — The investment arm of state-owned telecom operator China Unicom and internet giant Tencent have gained unconditional regulatory approval for their joint venture (JV), marking a significant step in the telecom operator's private-public ownership reforms.

After the approval drew attention on Wednesday, China Unicom shares surged 10% and Tencent shares rose 1.41%.

According to the official document, Unicom Innovation Venture Capital signed an agreement with Shenzhen Tencent Industry Venture Capital Co to establish a JV. The JV is intended to be mainly engaged in content distribution network (CDN) and edge computing business. Upon the deal's completion, Unicom Innovation Venture Capital, Shenzhen Tencent Industry Venture Capital and a platform for relevant employees' shareholding will hold 48%, 42% and 10% of the equity of the JV respectively.

Founded in April 2014, Unicom Innovation Venture Capital, a subsidy of China Unicom, mainly engages in self-funded investment. The Tencent investment unit was created in September 2019 in South China's Guangdong Province, committed to venture capital, business management consulting, investment consulting.

The JV is likely to capitalize on the strengths of both sides to build more secure and self-controlled digital infrastructure. China Unicom has tremendous advantages in digitalized technological infrastructure as a major telecom operator, especially base stations and networks. Tencent, one of China's digital economy giants, has a wide range of business such as content operations, websites, apps and user services, which will certainly strengthen the new JV's competitiveness, according to analysts.

Since 2017, Unicom and Tencent have established cooperation several times. At the Mobile World Congress held in Shanghai in 2018, China Unicom and Tencent signed a framework agreement to form a strategic partnership and establish a 5G Joint Innovation Lab to cooperate in areas such as edge computing, network slicing, Internet of vehicles, and high-precision positioning.

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