China Unicom announced it will set up operating centres with Tencent in Shenzhen and Alibaba in Hangzhou, lending credibility to reports the two internet giants will inject capital into the country’s second largest operator as part of mixed-ownership reform efforts.

Despite earlier denials by China Unicom, the announcement to set up the operating centres appears to confirm Alibaba and Tencent will emerge as new shareholders in the operator, reported.

Last week China Unicom said it is still negotiating with potential backers, following reports a number of China’s largest internet companies were set to make a CNY85 billion ($12.6 billion) investment in the state-owned operator.

Reports surfaced in late July and Baidu, two of China’s largest internet companies, would join Alibaba and Tencent to invest in the mobile carrier, as the government tries to revive state-run enterprises.

In late June it was reported the operator would get around CNY70 billion in funding, led by Alibaba and Tencent. The operator subsequently denied it reached a deal to receive investments from the internet giants as part of the government’s efforts to inject private capital into state-run enterprises.

China Unicom secured approval from the National Development and Reform Commission to begin a “pilot run” for mixed-ownership reform. It announced in April it was reviewing its ownership structure in a move which could see the company take on more private investment.

The Chinese government is keen to drive more private investment in state owned companies, in a bid to improve telecoms infrastructure in the country and fuel competition.