Telefónica, the largest telecommunications company in Spain, announced on Thursday that it has agreed to buy Telecom Italia’s German broadband unit, Hansenet.

Telefónica, in its filing to the Spanish market regulator, said that it would purchase Hansenet from Telecom Italia for $1.34 billion, and the deal would be carried out in cash.

According to the company, the acquisition would help it to improve its standings in the German telecommunications market, which has become highly competitive in the past few years.

The company had only registered 253,000 Internet customers by the end of the June 2009.

The acquisition will provide Telefónica around 2.2 million broadband customers, which will bring it up to the level of its rivals Vodafone PLC, United Internet AG and Deutsche Telekom AG.

Telefónica also mentioned that the deal still requires an approval from the competition authorities, which is expected to get in the first quarter of 2010.

On the other side, the sale of Hansenet will enable Telecom Italia to reduce its debt of €35.5 billion.