Telefonica of Spain solidified its foothold in China’s rapidly expanding telecom sector with plans to invest US $1.16 billion for a 5.5% stake in the entity to result from the upcoming merger of China Netcom and China Unicom. Wireless carrier China Unicom is slated to acquire fixed line operator China Netcom as part of a government-mandated restructuring plan that calls for the combination of China’s six regional fixed line and mobile phone operators into three national carriers that would be capable of offering bundled services. Currently, Telefonica holds a 5% stake in Netcom, and the Spanish carrier is soon expected to raise that holding to 7.2%. At that point, and as the first part of a two-prong transaction, Telefonica would acquire additional Netcom shares from U.S-based fund manager Alliance Bernstein Holdings to bring its total stake up to 12%. The second part of the transaction would take place upon the merger of Netcom and Unicom, through which Telefonica would emerge with a total stake of 5.5% in the combined entity. Describing China as “an increasingly important market, both in terms of size and growth,” a spokesman for Telefonica asserted: “we can bring our expertise and technical know-how, particularly with regard to the integration of fixed and mobile services.”