MADRID--Gas Natural SDG SA said Monday it has agreed to sell its telecomunications unit to private equity firm Cinven Group Ltd. for 510 million euros ($696 million), part of an effort by the Spanish power utility to divest non-strategic assets.

The unit, called Gas Natural Fenosa Telecomunicaciones, provides fiber-optic cable services through a network in Spain and several Latin American countries, Gas Natural said in a press release.

Gas Natural said it will book a EUR250 million pretax gain on the sale.

The Gas Natural unit is the latest of several telecommunications assets to be acquired by buyout firms in Spain, a market that analysts consider ripe for further consolidation. Firms like Carlyle Group LP and CVC Capital Partners Ltd. in recent years have acquired regional cable television operators in the country.

Write to Christopher Bjork at christopher.bjork@wsj.com

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