TEF Telefonica SA

By Jeannette Neumann and Ian Walker 

MADRID-- Telefónica SA has agreed to sell up to 40% of its Telxius infrastructure unit to KKR & Co. as the Spanish telecommunications giant seeks funds to whittle down its debt.

Telefónica said KKR will pay EUR1.28 billion ($1.35 billion), or EUR12.75 a share, for Telxius. The unit owns and operates around 16,000 telecommunications towers in five countries and around 31,000 kilometers (19,263 miles) of submarine fiber optic cables.

The price values the entire Telxius business at EUR3.2 billion, the bottom end of the EUR3 billion to EUR3.7 billion indicated range the company had set on Feb. 10 when it announced that it had received several offers to buy a stake in the telecommunications tower business.

Telefónica said it would maintain a majority stake and operational control of Telxius and continue to consolidate the unit's results in its accounts. Telefónica shares were down 0.4% in morning trading in Madrid.

Madrid-based Telefónica had tried to float Telxius last year, but was forced to cancel an initial public offering at the end of September because of weak demand. Telefónica had also tried, and failed, to sell its British mobile operator O2 as part of a debt-reduction drive.

Telefónica had EUR50 billion of net debt as of Sept. 30, above the company's market value of around EUR47 billion.

After those failed asset sales, Telefónica cut its dividend at the end of October to appease investors who had been calling for the company to trim its dividend to a more sustainable level, and shift more cash toward paying down debt.

Write to Jeannette Neumann at jeannette.neumann@wsj.com and Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

February 21, 2017 04:36 ET (09:36 GMT)

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