Telefonica of Spain, the world’s third biggest telecom group by market value, has agreed to pay $290 million for a 3 per cent stake in China Netcom, China’s second largest fixed line operator listed in both Hong Kong and New York. The move signals Telefonica’s breaking into the state-run telecom sector of China.
It said it had signed a broad strategic alliance with Netcom and hoped to eventually raise its stake to the maximum 5 per cent to qualify for a seat on the board. The two companies are expected to cooperate in areas such as equipment purchasing, research and development, marketing and business strategies. This partnership is along the lines of Vodafone’s picking up a 3.3 per cent stake in China Mobile, the country’s largest wireless operator.
