Tencent Holdings will set up a joint venture with state-owned telecom operator China Unicom amid anxieties over the future of the country’s private tech sector under China’s leader Xi Jinping, reports Nikkei Asia. Shares in Shanghai-listed China Unicom surged 10% on Wednesday after reports of the deal, which was approved by China’s top market watchdog on October 18, were picked up by state media and widely shared on social media.
The joint venture will mainly engage in content distribution networks and edge computing. A China Unicom subsidiary will hold a 48% stake in the entity while a Tencent subsidiary will take a 42% share. The remaining 10% will be held by employees of the joint venture.
The deal between one of China’s biggest private companies and a major state-backed entity comes as foreign investors become nervous about the government’s grip on the domestic tech sector.