Web giants in vanguard of overhaul

China's internet powerhouses are striving ahead as pioneers in a government-led reform to shake up the country's bloated State-owned enterprises.

The introduction of a host of tech giants as strategic investors in the nation's second largest telecom operator underpins Beijing's hope to overhaul bulky SOEs to shift to better productivity using their expertise and experience, analysts said.

The bloc comprises perhaps the most famous names in the technology field, including gaming and social giant Tencent Holdings Ltd, search engine Baidu Inc, e-commerce majors Alibaba Group Holding Ltd and JD.com Inc, all of which are prolific buyers overseas.

Martin Lau, president of Tencent, told investors on Wednesday that the move is a "monumental step" in China's economic restructuring effort. The company invested 11 billion yuan ($1.65 billion) to claim 5.18 percent of China United Network Communications Group Co Ltd's Shanghai listed arm.

Baidu, which accounts for 3.3 percent of the new venture, said in a statement that it is confident about the future of artificial intelligence and how its applications in areas like autonomous driving will fuel new momentum for telecom carriers.

The inclusion of China's top-tier tech firms in such a sensitive industry symbolizes Beijing's determination to carry out the reform in a thorough and open manner, said Xue Yongfeng, deputy general manager of the research unit at Beijing-based Analysys.

"Each of these participants is an experienced investor. They know how to bring business synergies and create value in a culturally diverse environment," he said.

Tencent, Alibaba and Baidu, often known as the country's "technology trinity", have altogether spent $112.4 billion in 174 overseas deals since 2012, according to market intelligence group Mergermarket in June.

The benefits of investing in China Unicom also include strengthening ties with a company responsible for rolling out the next-generation technology that is essential for keeping customers loyal to their online services, said Peter Liu, research director at IT consultancy Gartner Inc.

"There's clearly a gap between the (tech firms') desires to deploy new technology and the current internet infrastructure," Liu said, adding that this is notably holding back developments in the realm of AI and virtual reality.

"Capital injection would help relieve financial burdens for the cellular carrier to push ahead with its 5G deployment, which would in turn benefit internet companies," he said.

Pursuit of data is also a major motive behind the deal, said Xue from Analysys. Dozens of emerging businesses, from bike rental, smart delivery, to the still-nascent connected healthcare services, all rely on secure and stable mobile connectivity.

"As the internet is so mobile dominated, tech players may need operator-level data to gain full access to people's online behavior and cash in on such information under proper guidance," he said.