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TELECOMS

Telefónica sells Czech unit to PPF for 2.5 billion euros

Spanish telecoms giant to use proceeds to reduce financial debt

Spanish telecoms giant Telefónica said Tuesday it had reached an agreement with the PPF Group to sell a 65.9-percent stake in its Telefónica Czech Republic unit, including its operations in Slovakia, for a total cash consideration of 2.467 billion euros.

In a statement, Telefónica said 2.063 billion euros is payable on the completion of the deal, with the remaining 404 million to be paid over four years. Telefónica will also receive a dividend payment of 260 million euros this month.

PPF is expected to launch a mandatory tender offer for the rest of the Czech company, although Telefónica said it would maintain a 4.9-percent stake in Telefónica Czech Republic and remain as an industrial and commercial partner for four years. Telefónica has the right to offload its remaining shares subject to certain conditions once the mandatory offer is over.

Telefónica Czech Republic and Telefónica Slovakia will change their company names but will continue to trade under Telefónica’s O2 brand for up to four years.

Telefónica has already sold assets in Ireland and Germany as part of its debt-reduction program. It said the Telefónica Czech deal would lower its net debt by about 2.685 billion euros, allowing it to meet its commitments in this area for the year.

“This has been a decisive year for Telefónica’s transformation process, as it continues to successfully execute its strategy of increasing financial flexibility and strengthening the operations in its core markets,” the statement said.