Telefonica in virtual telecoms deal with fonYou

MADRID, March 27 (Reuters) - Telefonica (TEF.MC) has reached a deal with start-up Spanish telecoms firm fonYou allowing the smaller operator to offer virtual phone services in Spain by the end of the year, fonYou said on Thursday.

FonYou is looking to expand in the rest of Europe and Latin America from 2009 and has opened negotiations with possible partners.

Its phone offer will integrate web-based services with traditional mobile telephony, mainly targeting Internet users.

"FonYou is a real telecoms operator with its own core network infrastructure ... This capacity to innovate differentiates fonYou from most other MVNOs which merely resell their host network operators' services," it said in a statement.

Financial details of the deal were not provided.

Virtual operators piggy-back the spectrum of existing telecoms firms, paying a fee to do so. (Reporting by Elisabeth O'Leary; Editing by David Holmes)