Tencent and China Unicom plan joint data centers, edge computing

Regulators have approved a joint venture between Tencent and state-owned telecommunications company China Unicom. Its main business will be internet data centers (IDC), content delivery networks (CDN) and edge computing.

Unicom Innovation Venture Capital and Tencent Industry Venture Capital, venture capital subsidiaries of respective companies, will control 48 and 42 percent of its shares. The remaining 10 percent will be held by employees. 

Both have worked in these areas before. Their combined market shares in IDC and CDN are around 15 percent and 10 percent. Anti-trust regulation in China dictates that the parties forming a joint venture should control no more than 15 percent of the market, or 25 percent if they are suppliers and customers. 

LU Shan, President of Tencent’s Technology and Engineering Group, is now a board member of China Unicom. Both are major shareholders (18 percent by China Unicom, 5 percent by Tencent) of the National Internet Exchange Points, a large telecom project sponsored by the Ministry of Industry and Information Technology.