Reports: Telefonica To Start Sale Of $3.6 Bln Czech Stake

(RTTNews) - Spanish telecommunication group Telefonica SA (TEF, TED.L) is preparing to start a sale of its 69.4 percent stake in its listed Czech unit Telefonica Czech Republic A.S., according to media reports on Monday.

The sale of the stake, valued at $3.6 billion, is said to be part of Telefonica's efforts to reduce debt and raise cash ahead of further consolidation in Europe.

Goldman Sachs Group Inc. (GS) and Societe Generale SA (SCGLY.PK) are said to be helping Telefonica to find a buyer for its stake in the Czech Republic's biggest phone company. A deal will enable Telefonica to continue to divest non-core assets and focus on its main European assets.

Telefonica Czech Republic's share price rose 6.6 percent to 323.00 koruna in Prague on Monday. Czech billionaire Petr Kellner's PPF Group is said to emerge as the most likely buyer of the Telefonica Czech stake.

Telefonica entered the Czech Republic in 2005, buying a controlling stake in former monopoly Cesky Telecom AS from the government for about $3.6 billion. At the end of June 2013, Telefonica Czech had a total client base of 9.3 million.

In late June, Telefonica agreed to sell its Irish business, Telefonica Ireland, to Hutchison Whampoa Group (HUWHY.PK, HUWHF.PK) for 850 million euros. In April, Telefonica agreed with Corporación Multi Inversiones for the sale of 40 percent of the company's assets in El Salvador, Guatemala, Nicaragua, and Panama for about $500 million.

The company has also agreed to acquire control of Royal KPN NV's German business in an 8.55 billion-euro transaction, and to gradually increase its holding in the company that owns 22.4 percent of Telecom Italia SpA (TI).

Telefonica has net debt of about 48.6 billion euros. The company's goal is to attain a net debt level of below 47 billion euros in 2013.

TEF closed Monday's trading at $16.96, up $0.17 or 1.01 percent on a volume of 1.12 million shares.