MADRID (Reuters) - Telefonica
In a statement to Spain's stock market regulator on Tuesday, Telefonica said it would sell a controlling 65.9 percent stake in the division to investment group PPF, owned by the Czech Republic's richest man, Petr Kellner.
The sale of the Czech unit, which contributed over 3 percent to Telefonica's earnings, is the latest in a series of disposals aimed at reducing debt below 47 billion euros by the end of the year.
Telefonica will receive 2.06 billion euros in cash when the transaction is closed and the remaining 404 million euros will be paid over the next four years. A 260 million euro dividend will also be paid to Telefonica by the Czech unit on November 11.
The Spanish group said the deal will help it cut debt by 2.69 billion euros. It will take a 56 million euro hit to earnings in the third quarter, the company said.
Telefonica said it will remain a commercial partner for four years with a 4.9 percent stake in the Czech business.
Analysts have said that shuffling assets could free up capital for other deals, such as its proposed takeover of the investment vehicle that controls Telecom Italia
"This transaction reduces Telefonica's debt and leaves them flexible to participate in Brazilian consolidation (a bid for TIM Brasil) and further investments in Europe," said Bernstein analyst Robin Bienenstock in a note to clients.
Telefonica is also in the process of selling its O2 Ireland business to Hutchison Whampoa <0013.HK>. ($1 = 0.7402 euros)
(Reporting by Julien Toyer; Editing by Erica Billingham)