The four parties have taken a combined 12 percent stake in China Netcom, the nation's third-biggest telephone company, the latter said in a statement. China Netcom offers phone services over the Internet at rates cheaper than those offered by traditional long-distance service operators.
The transaction is one of the largest private equity placements in Asia and is the first direct private investment by international investors in China's telecommunications industry, the statement said.
"The event signifies the further opening of China's telecom industry," said Edward Tian, China Netcom's chief executive.
Foreign investors are taking stakes in China's phone industry, poised to become the world's largest in a few years. China Mobile (Hong Kong) Ltd, the country's largest mobile phone operator, last year sold a more than 2 percent stake to the largest mobile service provider, UK-based Vodafone Group Plc.
China Unicom Ltd, the nation's second-largest phone company, said it also plans to sell shares in itself to foreign investors.
China Netcom is counting on selling equity to private investors because it needs the money to expand its broadband Internet network, an 8,490-kilometer, high-speed fiber optic system that links 17 major Chinese cities, including Beijing, Tianjin, Shanghai and Guangzhou.
The company paid for the 5.3 billion yuan (US$640 million) first phase of the project last year with loans from local banks, including the Bank of China and China Construction Bank.
Credit Suisse First Boston acted as the financial adviser for China Netcom for the stake sales.
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