Spanish telecommunications giant Telefonica is joining forces with its Chinese equivalent Unicom by means of each investing over US$1 billion in the other company.

The agreement was finalised on Sunday in Beijing making Unicom, Telefonica’s largest single investor with an 8% share of the company. The new strongly combined company will offer services to well over half a billion users not only in Spain and China but across Latin America and the Far East.

Both companies also envisage further tie-ins that they see as mutually beneficial for their ongoing growth. This new combination will see them invest heavily together in so-called WCDMA wireless networks which is seen as most likely winner of the next generation of mobile telecommunication technology.