Telefónica is selling 40 per cent of its business in Central America for $500 million (€379 million) Guatemalan-based Corporacion Multi Inversiones (CMI), as the Spanish operator continues to seek ways to reduce its heavy debt burden.
Reuters reported that the deal could raise an additional potential $72 million in the future depending on performance of the asset. The plan is to create a new company for the operations in Guatemala, El Salvador, Nicaragua and Panama, and Telefónica will continue to manage this business with majority control.
CMI is one of Central America's biggest corporations with interests in food, construction, finance and infrastructure. This is its first venture in telecoms, Reuters added.
Analysts welcomed the deal, and said it would allow Telefónica to get some value while maintaining control of assets in a market with huge future growth potential.
"The transaction allows Telefónica to crystallise some value and keep reducing its leveraging...and illustrates the variety of options it has to pursue this goal," Espirito Santo Investment Bank said in a note to clients, according to Reuters.
Telefónica is also reportedly eyeing a sale of its businesses in Ireland and the Czech Republic and analysts have also suggested it is considering a partial listing of its Colombian business. Other cost-saving measures could include a network-sharing deal with KPN in Germany in order to reduce the cost basis for the operators' respective German businesses, O2 and E-Plus.
Reuters reported that Telefónica is fighting to bring net debt below €47 billion ($62 billion) this year from €51.3 billion in 2012.
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