(Yicai Global) Nov. 3 -- Shares in China Unicom started to drop today, after soaring by the exchange-imposed limit yesterday, after the major Chinese telecoms company said that its recently approved joint venture with internet giant Tencent Holdings is a standard business cooperation and the investment amount is too small to be declared.

China Unicom’s share price [SHA:600050] closed down 1 percent at CNY3.71 (USD0.50). Earlier in the day it jumped 6.4 percent to CNY3.99 and yesterday it surged 10 percent.

While in Hong Kong [HKG:0762] the stock closed up 2.1 percent at HKD3.45 (USD0.44). Earlier in the day it climbed 6.5 percent to HKD3.60. Yesterday the bourse closed early due to a typhoon.

Tencent’s Hong Kong-traded stock [HKG:0700], though, slumped 4 percent to HKD221.40 (USD28.2).

The JV is a normal business tieup between the two parties and the investment amount does not meet the disclosure standards stipulated by the Shanghai Stock Exchange, China Unicom said yesterday.

This takes the wind out of market rumors that were swirling that the Chinese state-owned enterprise might take over the Shenzhen-based internet giant.

The JV between two units of China Unicom and Tencent has been approved, the State Administration for Market Regulation said yesterday. Unicom Innovation Enterprise Investment will hold a 48 percent stake, Shenzhen Tencent Industry Venture Capital 42 percent equity and employees the rest.

The JV will engage in content delivery network and edge computing business based on the strategic needs for the digital economy development, it said.

Prosus, a subsidiary of South Africa’s Naspers which is the largest shareholder of Tencent, issued a statement yesterday denying that Citic Group is negotiating with Naspers about buying its stake in Tencent. And Tencent said on Oct. 24 that a rumor it would receive investment from China Mobile is not true.

The JV is not the first partnership between China Unicom and Tencent. China Unicom brought in internet firms including Tencent, Baidu and Alibaba Group Holding as strategic investors in August 2017. At the time, Tencent paid CNY11 billion (USD1.5 billion) for a 5 percent stake in China Unicom.

Editor: Kim Taylor