China Unicom and Telefonica have agreed both to cooperate in various business areas such as joint acquisitions and to push forward a share swap.

Both parties have entered into a subscription agreement in which China Unicom and Telefonica agreed to invest the equivalent of USD1 billion in the other party through the acquisition of each party's shares. Pursuant to the subscription agreement, the share price for the subscription is the arithmetic average of the closing prices of each party's shares on the Hong Kong Stock Exchange and the Madrid Stock Exchange, respectively, for the 30 consecutive trading days ending on August 28, 2009. After the completion of the transaction, China Unicom's shareholding in Telefonica will be approximately 0.88% and Telefonica's shareholding in China Unicom will increase to approximately 8% from 5.38%.

These agreements were signed in Beijing by the operators' respective chairmen, Chang Xiaobing and Cesar Alierta.

Chang Xiaobing, chairman of China Unicom, stated, "We are pleased to see that the strategic partnership between China Unicom and Telefonica has been further deepened on the current basis. Both of the companies are major full spectrum services carriers in their respective market, and both have third-generation mobile communications business under WCDMA standard. We are looking forward to enhancing the partnership and achieving a win-win situation for both parties. We believe that the partnership will help improve our capacities to provide extensive telecommunication and information application services, and maximize shareholders' return."

As of July 31, 2009, China Unicom had 141 million mobile subscribers, 108 million local access subscribers, and 35.72 million broadband subscribers.

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