Having previously announced plans to sell a stake in its German subsidiary, Telefonica is reported to have hired bankers, UBS to handle the sale of up to 20% in O2 Germany.

UBS was earlier also reported to be handling the unrelated sale of towers by O2's rival, E-Plus.

Telefonica is looking to raise EUR 2 billion from the sale of the minority stake in O2 Germany, multiple sources told Bloomberg News. The company intends to hold the sale this year and the final size will depend on demand, one of the sources said.

Telefonica said that it would put a portion of the company up for sale as it seeks to reduce its EUR57 billion debt mountain.

O2 Germany and E-Plus would have a combined mobile-phone client base of 41.7 million, which would leapfrog Vodafone Group Plc (VOD)’s 36.5 million and Deutsche Telekom AG (DTE)’s 35.1 million. Based on wireless-service revenue in the first three months of this year, a combined E-Plus and O2 remains smaller, with about 1.53 billion euros, compared with Vodafone’s 1.7 billion euros and 1.66 billion euros for T-Mobile.

Proposals for a merger of O2 and E-Plus appeared to fall apart, even though the same bankers are handing separate transactions for both companies. It is claimed that the two companies came close to a deal, but it broke down over concerns that any deal not involving cash would hurt Telefonica's debt ratings.

Source: Bloomberg

Author: Vishesh Tyagi, handelot.com