(Yicai Global) Nov. 2 -- A joint venture between a subsidiary of leading telecom operator China Unicom and a unit of tech giant Tencent Holdings has been approved, the State Administration for Market Regulation said in a document revealed this afternoon.

Shares in China Unicom [SHA:600050] rose by the daily limit this afternoon on the news and closed up 9.97 percent at CNY3.75 (52 US cents) with total transactions of CNY1.07 billion (USD147.02 million). Shares in Tencent Holdings [HKG:0700] rose 1.41% at HKD 230.6 (29.38 USD) as Hong Kong Stock Exchange closed early due to typhoon.

The shareholders in the JV are Unicom Innovation Enterprise Investment with a stake of 48 percent, Shenzhen Tencent Industry Venture Capital with 42 percent, and employees with 10 percent, the document stated. The JV will specialize in content distribution and edge computing.

Unicom Innovation Enterprise Investment was set up in 2014 and focuses on business services, according to corporate registration information platform Tianyancha. Shenzhen Tencent Industry Venture Capital was formed in 2019 and is part of Shenzhen Tencent Industrial Fund.

Mixed-ownership reform allowing state-owned enterprises such as China Unicom to tie up with top private companies like Tencent will promote high-quality development of the economy, Pang Ming, chief economist and head of the research department of Jones Lang LaSalle China, told Yicai Global.

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 and members of the companies were nominated for seats on the China Unicom board of directors in February 2018, including Lu Shan, senior executive vice president of Tencent.

There have been some rumors recently about Chinese state-owned enterprises buying a stake in Tencent.

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.

Editor: Tom Litting