Telefónica has agreed to pay up to €802m ($1.15bn) for an additional 5.7 per cent of China Netcom, in a deal which should give it a significant holding in the company resulting from the merger of China’s second fixed-line group with mobile operator China Unicom.

The Spanish group, the world’s fourth-largest telecommunications operator by market value, said on Thursday it would pay €368m for an initial 2.7 per cent of Netcom, taking its total stake to 9.9 per cent, pending regulatory approval for the latest acquisition and that of 2.2 per cent in January. It has also agreed to pay between €392m and €434m for a second tranche, equal to 3 per cent of Netcom, following its planned merger with Unicom. The seller of both tranches is AllianceBernstein, the US asset management group.