BEIJING, Nov. 13 (Xinhua) -- China Netcom Group Corp announced on Monday an agreement with Spain's Telefonica SA to form a joint venture which will hold controlling shares in PCCW, a Hong Kong-based phone operator.

Telefonica will purchase an eight percent stake in PCCW which would increase the shares of the joint venture in PCCW to 27.94 percent, said China Netcom Group in a press release.

China Netcom Group, Telefonica and PCCW have signed a strategic alliance which will enable the three companies to fully cooperate in mobile services and voice communication.

China Netcom Group said that Telefonica was a well-known international telecom operator and its entry into PCCW would help to enhance the value of PCCW and guarantee better returns to the shareholders.

China Netcom Group acquired a 20 percent stake in the enlarged share capital of Hong Kong-listed PCCW last year for one billion U.S. dollars, at 5.90 HK dollars per share