Spanish telecoms group Telefonica has struck a deal which could eventually see it take control of Telecom Italia and its lucrative south American business without having to launch a full takeover bid.

Telefonica said it had agreed cash-and-share deals worth about €860 million to increase its stake in Telco, the controlling shareholder in Telecom Italia which it co-owns with some Italian investors.

Under a complex series of transactions, Telefonica will only gain full control of Telco – and therefore Telecom Italia – following approval by anti-trust regulators. But for now the group has ensured that Italian partners looking to cut their exposure to Telecom Italia have not sold their shares to another party.Telecom Italia is seen as a potential takeover target due to its prized Tim Participacoes mobile unit in Brazil. – (Reuters)