Spanish telecommunication company Telefonica will commit EUR 800 million in two Chinese telcos- China Netcom and China Unicom, which are set to unite as a single entity under the China’s restructuring program.

Following this investment, Telefonica will claim 5.5 percent of the united company and go on to become the largest private shareholder in the government- owned company.

Currently, the Madrid-based company owns 5 percent stake in China Netcom and the stake stands to be increased to 9.91 percent for a payment of EUR 368 million. And on completion of the merger, the total stakes in the entity will again be raised to 5.5 percent, as agreed between the two.

Earlier last year, speculation flew of Telefonica receiving an informal approval to eventually raise its stake in the expanded China Unicom to 10 percent.

Telefonica embarked on its first venture in China with 2.99 per cent stake that it acquired in Netcom in 2005, which later got expanded to 5 percent when it bought further 2.2 percent.

The total investment tops US$1 billion so far.