Deutsche Telekom agreed to buy a 20 percent stake in the country's biggest telecom group OTE from Marfin Investment Group (MIG).
"The agreement reached today is a welcome development, and conforms to the government's strategy on OTE," a joint statement by the ministers of finance and telecommunications said.
The German telecoms group said on Monday it would pay around 2.5 billion euros ($3.33 billion) for Marfin's stake as part of its strategy to grow its mobile communications business. The Greek government holds about 28 percent in OTE.
"It is a good deal. In a gloomy environment, we have a buyer willing to offer an impressive premium. The market will expect synergies and fat cutting in OTE," said Vasilis Kararizos, head of analysis at Proton Securities.
OTE shares were up 12 percent at 0900GMT in Athens.
OTE is the national telecommunications provider of Greece. Standing for Hellenic Telecommunication Organization, OTE is the incumbent telecommunications operator of Greece.
OTE was created in 1949 to bring several related public and private enterprises under one telecommunications umbrella. Prior to this, telephony, telegraphy, local and international connections were fragmented and ill coordinated.
Up to 1998, the telecommunications market in Greece was a monopoly. The market was opened to competitors and OTE was gradually privatized. As a result, the Greek government held under 50% of the company's stock. Along with the rest of the telecoms market, OTE is regulated by the National Telecommunications and Post Commission.