TeliaSonera will take a 1.4 percent stake in the music streaming platform and both companies will be "committing resources, staff and other assets" to areas including data analytics and advertising, the telecoms firm said on Wednesday.
The latest funding round comes as competition in the space heats up, with Apple unveiling its own music streaming service just two days ago.
Music streaming revenues have overtaken CD sales in the U.S. and are closing in on digital downloads, according to the Recording Industry Association of America.
Spotify is looking to differentiate itself from its rivals , and last month announced a slew of new features including podcasts, radio shows from major broadcasters and video offerings.
The Swedish streaming service has 60 million active users and 15 million of those are paying subscribers, but the company has struggled to turn a profit. While revenues jumped 45 percent in 2014 to top 1 billion euros ($1.13 billion), Spotify actually posted an operating loss of 165.1 million euros, compared to 91.2 million in 2013.
The $115 million TeliaSonera investment forms part of a $526 million round of funding raised by Spotify and reported by the Wall Street Journal, citing people familiar with the matter, earlier Wednesday.
Spotify declined to comment on the story.
The WSJ said British asset managers Baillie Gifford, Landsdowne Partners and Rinkelberg Capital, along with Canadian hedge funds Senvest Capital and Discovery Capital Management, were part of the funding deal.
Halcyon Asset Management, GSV Capital, D.E. Shaw & Co., Technology Crossover Ventures, Northzone and P. Schoenfeld Asset Management, were the U.S. investors that were on board, the WSJ said. It added that Goldman Sachs, which Spotify hired to raise the new funding, also invested through its Global Private Opportunity Partners fund.