The stock price of China Unicom, a telecommunications giant with a market value of 100 billion yuan, is rising rapidly and its valuation is expected to be reshaped.

The A-share market reappears as the dancing elephant. Affected by the favorable impact of the approval of the new joint venture, in the afternoon of November 2, the stock price of China Unicom's A shares, a telecommunications giant with a market value of 100 billion yuan, rose rapidly. At around 14:18, a million-lot large order went straight to the daily limit. As of the close of the day, China Unicom reported 3.75 yuan per share, up 9.97%, and the day's transaction volume exceeded 1 billion yuan.

In terms of news, on November 2, according to the "List of Unconditionally Approved Cases of Concentration of Operators from October 17 to October 23, 2022" released by the official website of the State Administration for Market Regulation, China Unicom Innovation and Venture Capital Co., Ltd. (hereinafter referred to as China Unicom Venture Capital) and Shenzhen Tencent Industrial Venture Capital Co., Ltd. (hereinafter referred to as Tencent Industrial Investment) to establish a new joint venture was unconditionally approved.

On the evening of November 2, China Unicom announced that this cooperation is based on the company’s strategic need to fully advance into the digital economy. China Unicom Venture Capital, a subsidiary of the company, plans to establish a new joint venture with Tencent Venture Capital. The establishment is in progress and registration has not yet been completed. It will have no significant impact on the company's current production and operations. In the long run, it will help amplify the advantages of both parties and strengthen the CDN and edge computing industry chain.

The reporter learned from multiple interviews that the cooperation between China Unicom and Tencent to establish a new company is of benchmark significance. In the future, there may be more cases of cooperation between telecom operators and leading technology companies in the market. At the same time, the stock prices of telecom operators have been undervalued for a long time. The rising limit of China Unicom's A shares also means the recognition of high-quality investment targets in the capital market, demonstrating investors' confidence in the telecom operator sector.

Strengthening the foundation of the digital economy by joining forces

It is reported that the new joint venture between China Unicom Venture Capital and Tencent Industrial Investment intends to be mainly engaged in content distribution network (CDN) and edge computing business. After the transaction is completed, China Unicom Venture Capital, Tencent Industrial Investment and relevant employee stock ownership platforms will hold 48%, 42% and 10% of the equity of the joint venture respectively. China Unicom Venture Capital and Tencent Industrial Investment will jointly control the joint venture.

Currently, China Unicom Venture Capital’s main business is investment with the company’s own funds, and the ultimate controller is China United Network Communications Group Co., Ltd.; Tencent Industrial Investment’s main business is venture capital, corporate management consulting, and investment consulting , the ultimate controller is Tencent Holdings Co., Ltd.

According to Wang Zhengnan, a senior observer in the telecommunications operation industry, China Unicom has infrastructure advantages and Tencent has a complete technology research and development and marketing system. The complementary advantages of both parties can further strengthen the strength of the newly established joint venture and strengthen the new joint venture. Establish the company’s technological advantages.

The establishment of a joint venture between China Unicom and Tencent may be just the beginning. Wang Zhengnan told a reporter from Securities Daily that more cases of cooperation with technology giants have emerged from China Mobile, China Telecom and China Radio and Television.

At the current stage, there are already signs of increased cooperation between telecom operators and technology giants. As early as 2017, China Unicom introduced strategic investors such as Tencent, Alibaba, Baidu, and JD.com; in addition, Huawei also has many-dimensional cooperation with telecom operators.

Wang Zhengnan believes that cooperation between telecom operators and technology giants can, on the one hand, achieve complementary advantages in resources, achieve mutual benefit, expand market space in terms of revenue scale, and share the value of industrial digitalization; on the other hand, On the other hand, the strong alliance between telecom operators and technology giants will also help telecom operators consolidate the foundation for digital economic development and better empower traditional industries; the cooperation between the two parties can, to a certain extent, strengthen my country's development in emerging industries such as cloud computing and data centers. International competitiveness in technological fields.

The valuation of telecom operators is expected to be reshaped

China Unicom's daily limit also released a positive signal that the valuation of telecom operators is expected to be reshaped.

The industry generally believes that given the large scale of China Unicom and Tencent, it is still difficult to judge whether the newly established company can bring significant benefits to the performance of both parties. However, the positive signals and future imagination released by the cooperation between the two parties can stimulate investors' enthusiasm for telecom operators and demonstrate the market's confidence in the investment value of the telecom operator sector.

The details of the new company have not yet been clarified, so it is difficult to judge the incremental market space that the establishment of the new company will bring to China Unicom and Tencent. However, the value of the cooperation between China Unicom and Tencent lies not only in the establishment of a joint venture, but also in mutual empowerment and the enhancement of the value of the entire industry chain.

An industry insider who did not want to be named told a reporter from Securities Daily.

In July this year, China Mobile, China Unicom, and China Telecom jointly held an investor exchange event in the telecommunications industry for the first time. Liu Liehong, chairman of China Unicom, said at the exchange event that we can no longer look at the telecommunications industry through the old eyes, nor can we simply use old indicators and models such as user growth that have lasted for decades to evaluate the new value of the telecommunications industry. Citing data, he said that in the first five months of this year, the reason why the telecom industry still maintained a year-on-year revenue growth of 8.5% was because about 70% of incremental revenue came from emerging businesses, and the telecom industry valuation model needs to keep pace with the times. Reinvent.

The above-mentioned industry insiders told the "Securities Daily" reporter that China Unicom A shares and China Unicom H shares are seriously undervalued, with generous dividends, solid performance, and relatively broad room for future growth. Therefore, from the perspective of investment targets, investment value and investment timing, good news can stimulate investors' enthusiasm at the moment.

In fact, in addition to China Unicom, other telecom operators are also relatively good investment targets. In the opinion of this industry insider, as the imagination space of telecom operators further opens up, the valuation model of telecom operators is expected to be reshaped in the future.