(Reuters) -News Corp and telco Telstra have agreed to sell their Australian cable TV and streaming company Foxtel to British sports platform DAZN, valuing the struggling business at A$3.4 billion ($2.1 billion), including debt.

As part of the deal, shareholder loans valued at A$578 million outstanding will be repaid in full and Foxtel's current debt will be refinanced at closing.

News Corp will hold a 6% stake in DAZN and Telstra will own 3% of the London-headquartered global streaming platform backed by billionaire Len Blavatnik.

Foxtel has weighed on News Corp profit for years as the number of people who pay monthly subscriptions for its broadcast content switched to cheaper streaming options like Netflix. The company has itself launched a streaming service charging less than its traditional service.

"Australians watch more sport than any other country in the world, which makes this deal an incredibly exciting opportunity for DAZN to enter a key market, marking another step in our long-term strategy to become the global home of sport," said DAZN co-founder and CEO Shay Segev.

News Corp will get one board seat at DAZN, which was founded in 2016 and is ramping up its efforts to become a global streaming platform like Apple TV.

Telstra will receive A$128 million in cash for the repayment of shareholder loans.

ASX-listed shares of News Corp gained 1% to A$49.65 in early trade while shares of Telstra traded 0.4% higher against a rising broader benchmark index.

($1 = 1.5997 Australian dollars)