Spanish telecoms company Telefonica has agreed to increase its stake in Telco, the holding company that controls Italy's Telecom Italia, the other Telco shareholders announced on Tuesday.
Italian banks Mediobanca and Intesa Sanpaolo and insurer Generali said in a joint statement that Telefonica will pay an initial 324 million euros (437 million U.S. dollars) to increase its holding in Telco, the investment vehicle with three financial investors that owns 22.4 percent of Telecom Italia.
The Spanish carrier, which is already Telco's largest shareholder with a stake of 46 percent, or about 10 percent of Telecom Italia shares, will increase its stake to an initial 66 percent with a plan to bring it to around 70 percent.
Under the terms of the deal, Telefonica has an option to further increase its stake to 100 percent of the holding from next year. The option, however, is subject to authorization by the antitrust authorities of Brazil and Argentina.
Debt-laden Telecom Italia, hit by the ongoing deep recession in the country, has struggled to deliver investment returns, according to local reports. The Italian group's stock price rose sharply in early trading on Tuesday after the deal announcement.