Telefónica sold a 1.51 per cent stake in China Unicom (Hong Kong) for a total amount of about €322 million ($355 million), the company revealed in a regulatory filing to the Spanish stock exchange.
The Spain-based operator now owns close to 1 per cent of the Hong Kong-listed company and said it remains committed to the "strategic alliance" between the two companies that was first established in 2009. The two companies work together in a number of areas including global smartphone procurement and big data services in China.
Telefónica did not say why it had decided to offload some of its shares in China Unicom, although the company has been exploring different ways to reduce its debt of about €50.2 billion.
Some plans have been thwarted, such as the proposed sale of O2 UK to CK Hutchison. That deal was recently blocked by the European Commission over competition concerns. Telefónica has since confirmed that it has scrapped plans to sell O2 UK -- a move believed to be linked to the market turmoil that resulted from the UK's decision to leave the European Union (EU).
Telefónica had also been planning an initial public offering (IPO) for its Telxius towers unit, but that transaction is also now understood to be on hold because of the market volatility after the UK referendum.
Bloomberg noted that Telefónica risks having its credit rating cut by Moody's should it fail to find ways of reducing its debt by the end of the year. The news agency added that Telefónica needs to raise about €14 billion to achieve its target of a ratio for reported net debt to EBITDA of 2.35, according to Moody's.
Telefónica is also far from the only European telecoms operator to be reviewing its options in a number of areas following the UK referendum. For example, Vodafone has also indicated that it could move its group headquarters from the UK if freedom of movement for people, capital and goods are not assured following the country's exit from the EU.
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