Tencent and China Unicom Form Joint Venture for CDN and Edge Computing

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BEIJING, May 5 (TMTPOST) -- Telecom operator China Unicom announced Thursday on its official WeChat account that Yunzhou Times Technology Co., Ltd (Yunzhou Times), co-funded by itself and tech giant Tencent, was established on April 26 in Beijing.

Business registration information shows that the registered capital of Yunzhou Times is 300 million yuan, and its business scope covers Internet data services, artificial intelligence public data platform, big data, quantum computing and 5G communication technology services. China Unicom said Yunzhou Times, through independent research and development, would create independently controllable content distribution network (CDN) acceleration, MEC series products and related digital innovation business system with major differentiator. Relying on China Unicom"s network resources and capabilities, as well as Tencent"s technology, consumption and Internet industry ecosystem, the company would provide CDN and edge computing services for digital government and artificial intelligence.

Unicom Innovation Venture Capital, a subsidiary of China Unicom, will hold 48% of the new company while the Shenzhen Tencent Industry Venture Capital, a subsidiary of Tencent, will have a 42% stake. The remaining 10% will go to the employees of Tianjin Shuzhi Tihang Technology Partnership Enterprise. The legal representative of Yunzhou Times is Ma Yuerui, who was once the deputy general manager of China Unicom (International).

The news on the regulatory approval for a joint venture of Tencent and China Unicom was misinterpreted as " a new hybrid company created by the two tech behemoths", prompting a temporary trading suspension for China Unicom. Yang Guang, the director of strategic services for wireless operators at Strategy Analytics, believes that this is a normal cooperation and there is no need to over-interpret it.

Yang noted that compared to CDN, edge computing may have more potential for cooperation. Edge computing is widely regarded as an important foundation for digital transformation of enterprises. In this field, the cooperation between the two major shareholders can be complementary: China Unicom has edge infrastructure including machine room, the most important asset; Tencent, with its technology and cloud computing ecosystem, can provide enterprises with a unified application and computing portal.

Yang also said that the market share of China Telecom’s and China Mobile"s cloud business in China is rising faster while China Unicom"s cloud business is relatively weak, thus cooperation is a more rational choice for the latter. In addition, since clients often want to unify the edge computing platforms with their public cloud platforms, international operators prefer cooperation with major players of public cloud platforms.

However, Tencent and China Unicom only account for 5%-15% of the market in terms of CDN and edge computing, according to the State Administration of Market.

Wang Xiaochu, former chairman of China Unicom, said that for strategic investors as Internet companies, further cooperation would focus on the retail system, channels, content, home Internet, payment services, cloud computing and big data. Tencent and China Unicom have long been working closely, as evidenced by the joint launch of the Tencent Card at the end of 2016, the launch of the China Unicom and Tencent cloud service cooperation platform in January 2018, and the strategic partnership around 5G innovation in June 2018.