Investment group PPF has acquired a 66% controlling stake in the Czech unit of Telefonica for around €2.47 billion.
The deal also covers Telefonica’s operations in Slovakia. A sale to PPF had previously been rumoured.
While the holding companies in both markets will change their names, the unit will continue to operate under the O2 brand for the next four years. Telefonica will remain a commercial and industrial partner to the unit for the same period. The Spanish firm is retaining a 4.9% stake in the Czech operator.
The divestment is part of Telefonica’s drive to reduce its debts and narrow its focus onto core markets. It follows similar deals disposing of assets in Ireland, Central America and Germany, with the goal of reducing net debt to below €47 billion by the end of the year.
Once the deal has closed, Telefonica will receive €2.06 billion upfront in cash followed by a deferred payment of €400 million across the next four years. The operator will receive an additional €260 million dividend before the shares are transferred.
PPF is likely to launch a tender offer on the remaining 31% stake of Telefonica Czech Republic, which is currently a free float. The acquisition gives the investment group the opportunity to begin a 4G offering in the Czech Republic; PPF declined to bid in the recent 4G auction as it disapproved of certain licensing conditions.