Tencent, China Unicom’s planned joint venture approved by regulators, mainly engages in CDN, edge computing

 

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Chinese tech giant Tencent Holdings and state-owned telecommunications firm China Unicom have received regulatory approval to set up a joint venture, a public document showed..

Unicom Innovation Venture Capital, a subsidary of China Unicom, will control 48% of the new company while the Shenzhen Tencent Industry Venture Capital, a subsidary of Tencent, will control 42%, with the additional 10% to go to the company’s employees, according to information released in September.

The joint venture is mainly engaged in content distribution network (CDN) and edge computing businesses and leveraging independent research and development, it will develop comprehensive CDN/MEC platform capability, operating capability and product innovation capability, China Unicom has said.

China Unicom said in a statement on Wednesday that the joint venture was formed to fulfil the company’s “strategic need to comprehensively foray into the digital economy”, adding that Tencent is a long-term strategic investor in the Unicom Innovation Venture Capital.

It noted that the joint venture is still in the process of being established and it does not have an impact on China Unicom’s current business.

According to information for the State Administration of Market Regulation, Unicom Innovation Venture Capital’s market share in internet digital center (IDC) service market was 10% – 15% in 2021, while Tencent’s IDC was mainly for self use. In CDN service market, Unicom Innovation Venture Capital’s market share was 0-5% and Tencent Industry Venture Capital’s market share was 5% – 10%. In the edge computing market, the two’s combine market share was 0 – 5%.

China’s edge computing market reached 43.64 billion yuan in 2021, including 29 billion yuan of edging hardware market and 14.6 billion yuan of edging software and service market, according to a report from the China Academy of Information and Communications Technology under the Ministry of Industry and Information Technology.

The edging computing market is expected to grow by an average annual growth of more than 50% and by 2024, the market size is expected to reach 180.37 billion yuan, according to the repot.