Telefónica has signed a strategic agreement with China Unicom that will see the two firms work together on M2M technologies such as cellular communications, RFID sensors and GPS.

The agreement is an extension of the alliance that the two firms established in 2010. In January this year they expanded that alliance by investing $500m in one other’s businesses, and this latest venture is aimed at further exploiting the combined scale of both companies.

China Unicom will cooperate with Telefónica’s newly created digital unit, Telefónica Digital, in constructing, maintaining and operating M2M platforms and developing the corresponding technical specifications. They will also jointly participate in purchasing, testing and market analysis processes.

In addition, the two firms will establish alliances with customers and suppliers to take advantage of economies of scale, and accelerate standardisation processes for M2M opportunities such as smart cities, smart transport, smart industry, energy efficiency and connected cars.

The companies said that they are hoping their scale will give them an ability to influence standards around M2M solutions and that they will be working with the International Organisation for Standardization and participating in its most relevant forums.

They added that the strategic agreement could be opened up, as a whole or in part, to other operators that may be interested in joining them on the venture.