Telefonica to up its stake in China Netcom

Telefonica SA, Europe's second-largest phone company, will pay up to US$1.6 billion in separate deals to boost its 5% stake in China Netcom, Bloomberg reported.

The Madrid-based company will buy 2.71% of China Netcom for US$529 million before China Netcom's planned merger with China Unicom. Telefonica will then later buy an additional 3.03% after the merger for around US$580 million.

If the two bids are successful, Telefonica will be the largest private investor in the China Netcom-Unicom entity, with a 5.5% stake.

The two Chinese telecom firms will seek approval for the transaction from shareholders later this month.