Spanish telecoms giant Telefonica SA is to raise its stake in the second largest fixed-line carrier in China to 9.9% from 5% as part of a strategic alliance with China Netcom Group Corp Ltd. It is thought the additional stake is worth around $540m.
The Spanish carrier is to buy shares from non-public minority Chinese shareholders, Netcom said in a statement to the Hong Kong stock exchange.
Telefonica’s 5% stake in Netcom gives it one seat on the board. If its stake rises to 9.9%, it will get a second seat. This will give Telefonica a valuable position in one of the world’s largest phone markets by users. China is estimated to have approximately 373 million mobile phone subscribers and 342 million fixed-line users.
It is therefore no surprise that Telefonica is keen to strengthen its partnership with Netcom. At the moment, the Madrid, Spain-based operator provides services to 140 million customers worldwide, mostly in Spain and Latin America.