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MADRID (AP) Spain's Telefonica says it has reached an agreement to raise its stake in Telco the holding company of Telecom Italia from 46 percent to 66 percent.

The telecommunications company said Tuesday it reached the deal with its Italian partners in Telco, Mediobanca, Intesa Sanpaolo and Generali.

It will take the controlling stake through a capital increase worth 324 million euros ($438 million). Telefonica said it intends to raise the stake to 70 percent through a further capital increase.

Telco owns 22.4 percent of Telecom Italia.

The Spanish company said the capital increase of non-voting shares in Telco would bring stability to the shareholding structure of Telecom Italia, maintaining the independence of the company.

Telefonica's shares were down 0.4 percent at 11.23 euros in early afternoon trading in Madrid.