Spanish telecom Telefónica (TEF) has signed an agreement with China Unicom (CHU) to use each other’s networks to expand their coverage. The agreement builds on a previous deal and extends and reinforces Telefónica’s footprint by sharing the use of points of presence (PoPs) on their international networks.
Under the agreement, Telefónica will be able to use PoPs on China Unicom’s network; in return, China Unicom will enhance its network with PoPs set up on Telefónica’s network. The two companies have a combined 640 million customers worldwide.
This agreement represents another step in the strategic alliance signed by the two companies in 2009, based on cooperation in different business areas and on their cross holdings. It also includes cooperation between the two groups on marketing and customer-service related activities.
Companies said they will be able to offer fixed voice and data services to their customers in a more efficient and cost-effective manner, and with an extended global reach.
In September 2009, Telefónica and China Unicom agreed to buy $1 billion in shares in the other and to begin cooperating in business areas. In January of this year, the companies agreed to expand their alliance, with both investing an additional $500 million in the other. Telefonica now holds a 9.7% stake in its Chinese partner, while China Unicom owns 1.4% of the Spanish firm.
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