China Unicom Withdraws Entrusted Contracting Operation Rights in Yunnan Province

(Original title: After the partner “withdrew from the group”, China Unicom officially announced!)

After Yunnan Unicom’s mixed reform project partners withdrew one after another, China Unicom (600050) issued an announcement on the evening of June 4, stating that Yunnan Unicom had withdrawn the entrusted contracting operation rights of the whole province; Yunnan Unicom will further leverage its advantages to comprehensively improve its business development capabilities and The ability to operate the whole process and the whole network can better integrate into the local economic and social development.

Limited recovery of all entrusted contracted operation rights

As a branch of China United Network Communications Co., Ltd., a subsidiary of China Unicom, China United Network Communications Co., Ltd. Yunnan Branch (referred to as “Yunnan Unicom”) recently took back Beijing Zhongdian Xingfa Technology Co., Ltd. Chuxiong, Pu’er, Qujing, Zhaotong, and Xishuangbanna five city operating companies controlled by Diandianji Network Technology Co., Ltd. entrust the right to contract and operate.

China Unicom stated that Yunnan Unicom has taken back the entrusted contracting operation rights of the whole province (including 16 cities and municipalities). In addition, after taking back the entrusted contracted operation rights, China Unicom Yunnan will further leverage the advantages of “one Unicom, integrated capabilities, integrated operation services” to comprehensively improve its business development capabilities and overall network operation capabilities, and better integrate into the local economy and society Development, build a solid foundation for digital information infrastructure, better serve the growth of the digital economy, and better provide customers with better services.

Yunnan Unicom was once one of China Unicom’s projects exploring the implementation of mixed-ownership reform at the provincial company level.

On May 17, 2019, Yunnan Unicom signed the “Double Hundred Actions” Comprehensive Reform Cooperation Agreement of China United Network Communications Co., Ltd. Yunnan Branch with Hengtong Optoelectronics, Yajin Technology, and Zhongdian Xingfa. During the cooperation period, it invested in the construction of its access network assets in 16 cities and municipalities in Yunnan Province, established a Yunnan provincial operating company and an innovative business platform, and entrusted contracted operation cooperation. The parties will make specific arrangements for the implementation of the cooperation project during the period of the cooperation agreement, and the cooperation will be valid for ten years.

Partner “withdrawal”

Although the overall cooperation validity period of Yunnan Unicom’s mixed reform project has not yet expired, partners have withdrawn one after another in recent years. The latest case is CLP Xingfa.

On June 2, China Power Xingfa announced that in order to effectively solve the current difficulties and problems in the comprehensive reform of Yunnan Unicom and protect the rights and interests of all parties, the wholly-owned subsidiary plans to withdraw from the cooperation of Yunnan Unicom’s mixed reform. For more content, please see “”

On May 31, 2023, Beijing Zhongdian Xingfa and Yunnan Unicom signed an agreement on the transfer of entrusted contracted operation rights to transfer the entrusted contracted operation rights of the above-mentioned five cities to Yunnan Unicom. Yunnan Unicom agreed to cancel the entrustment and take back the above-mentioned five cities Entrust the right to contract operation.

CLP Xingfa stated that the planned withdrawal of the wholly-owned subsidiary from Yunnan Unicom’s mixed reform cooperation and the signing of the handover agreement will help improve the certainty of the company’s operations, and there will be no harm to the interests of the company and all shareholders, especially small and medium shareholders. .

In addition to Zhongdian Xingfa, Yajin Technology, Hengtong Optoelectronics, etc. have previously withdrawn from the mixed reform project of Yunnan Unicom.

According to the data, Yajin Technology also had a dispute with Yunnan Unicom regarding the performance of the contract. In 2021, it began to sue each other in court. In the end, Yajin Technology lost the lawsuit. In the revised 2021 annual report, Yajin Technology accrued estimated liabilities for Yunnan Unicom’s litigation matters 269 ​​million yuan.

Yunnan Unicom also changed its partner before the lawsuit: On October 29, 2020, Hengtong Optoelectronics and Huatong Yuqiu Communication Industry Group Co., Ltd. undertook the original contracted area of ​​Yajin Technology in the form of a consortium. Lincang and Diqing are operating in three cities, and Hengtong Optoelectronics signed the comprehensive reform and change agreement as the representative unit.

Now the tripartite cooperation has also been terminated. On December 23, 2022, Yunnan Unicom, Hengtong Optoelectronics, and Huatong Yuqiu signed an agreement on the transfer of entrusted contracting and operation rights. Yunnan Unicom, the partner no longer undertakes the obligations of network investment, profit target supplement and contracted operation cooperation funds related to the entrusted contracted operation of 11 cities.

Yunnan Unicom project revenue declines

For CLP Xingfa, the withdrawal from the Yunnan Unicom project seemed a bit sudden.

On April 27, in the main business plan for 2023 in the 2022 annual report disclosed by CLP Xingfa, the company stated that it will actively accelerate the negotiation of the mixed reform of Yunnan Unicom, and at the same time strengthen the deep integration of resources with Yunnan Unicom, including ensuring that the adjustment of profit targets will be implemented as soon as possible , to continue to contribute profits this year and in the future, and to further strengthen the coordinated development with China Unicom, to fully develop operator integration services, and to refine and improve the operating quality of the new communication segment.

However, at the performance briefing on May 18, CLP Xingfa executives introduced that the company participated in the comprehensive reform project of Yunnan Unicom in five cities. Due to the continuous increase of sealing and control measures, it participated in roaming settlement and other related businesses in the mixed reform area. Net income and settlement incremental income decreased, and the profit target could not be fulfilled. After negotiating with Yunnan Unicom to adjust the profit target, a supplementary agreement on profit target adjustment has not yet been reached.

In addition, in the reply to the exchange inquiry letter on May 18, CLP Xingfa introduced the details of the Yunnan Unicom project in detail, that is, before December 31, 2021, the company provided 741 million yuan of investment funds to the aforementioned five branches; From January 1, 2022 to December 31, 2028, the company will provide a total of 23 million yuan of investment funds to the above-mentioned prefectural and city branches every year to invest in the design, procurement, construction and opening of the partner’s access network assets. During the cooperation period, the company provided 169 million yuan of investment funds to invest in government-enterprise innovation business.

On the other hand, Yunnan Unicom does not promise the company’s guaranteed profit, but has investment targets and target profit requirements for the partner; after the project cooperation period expires, the company should hand over the project to the authorized unit free of charge. The contract stipulates that the construction period of the project will be 10 years, and investment will be made every year. Last year, the investment progress has reached nearly 70%.

CLP Xingfa’s net profit in 2022 will turn to a loss of 860 million yuan, and its performance will be dragged down by the mixed reform project of Yunnan Unicom to a certain extent. According to CLP Xingfa, the big data application and operation service business includes the mixed reform business of Yunnan Unicom. Due to the impact of the special external environment, the settlement income from Yunnan Unicom has declined, and the operating cost of participating in this business is relatively fixed, which affects revenue and gross profit. The interest rate fell; the business suffered a loss, and an impairment loss of 156 million yuan was accrued for intangible assets.

In comparison, the comprehensive reform project of Guangxi Unicom, which CLP Xingfa participated in, saw a year-on-year increase of about 40% in revenue last year.

The progress of Yunnan Unicom’s project also affected the payment of project funds by CLP Xingfa’s suppliers. According to the disclosure, the balance of important accounts payable with an aging of more than one year at the end of 2022 is 574 million yuan, of which, according to the construction progress, 92.178 million yuan is confirmed to be payable to suppliers of the Information Industry Electronics Eleventh Design and Research Institute Science and Technology Engineering Co., Ltd.

According to CLP Xingfa, the company is the construction party involved in the mixed reform business of China Unicom, but due to special social reasons and factors such as Yunnan Unicom cooperation negotiations, the construction progress of the project has been delayed, some of which have not yet reached the acceptance and delivery status, and do not meet the settlement conditions . The company expects to follow the progress of the project and gradually settle and pay off the supplier by the end of 2024 under the condition of meeting the payment conditions stipulated in the contract.

Editor in charge: Zhang Qianyao

Proofreading: Wang Jincheng