Spain’s Telefonica is considering whether to sell its Irish subsidiary as a means of reducing debts, according to a report from the Financial Times.
Citing a source familiar with the situation, the newspaper reports that Telefonica (Madrid, Spain) has received expressions of interest in O2 Ireland and is considering the offers.
A deal could generate as much as €700 million ($911 million) for the Spanish operator, according to the report.
Interested parties are said to include Hutchison Whampoa (Hong Kong), which is already present in Ireland through its Three subsidiary, although a merger between two existing operators could fall foul of competition authorities.
Telefonica is aiming to lower its debts to less than €47 billion by the end of the year, from a current figure of about €51 billion, and evidently sees the sale of non-core assets as an important means of achieving that target.
Last month, the operator raised $500 million from the sale of a 40% stake in central American operations covering El Salvador, Guatemala, Nicaragua and Panama.
At the time, the Financial Times claimed Telefonica was considering a sale of O2 Ireland as well as its business in the Czech Republic.
It was also reported to be considering a listing of its operation in Colombia.
Telefonica described the central American sale as “part of a policy of proactive management of its asset portfolio and the initiatives to increase the company’s financial flexibility”.
During Telefonica’s recent earnings call with analysts, Angel Vila, the operator’s chief financial officer, said dividend reductions would go some way towards lowering debt but that Telefonica would also look to “actively manage [its] portfolio of assets” to achieve the end-of-year €47 billion target.
“Some of [our] markets could benefit from in-market consolidation,” he said. “Ireland could be … one.”
But Vila stressed that Telefonica was not looking to sell its business in Colombia and said the Czech Republic “continues to be a very strong cash generator”.
For the three months ending in March 2013, Telefonica reported a 10.1% decline in operating income, to €4.6 billion, with revenues dropping by 8.8%, to €14.1 billion, compared with the same period of 2012.