Spanish telecoms group Telefonica is reportedly working with UBS and JP Morgan Chase & Co to prepare an initial public offering (IPO) of its German unit, Bloomberg cites people with knowledge of the plans as saying. Telefonica, which is struggling to cut its debt burden amid falling revenue and profit in its domestic market, is looking to raise as much as EUR1.5 billion (USD1.8 billion) from the sale of a potential 20% stake in Telefonica Germany (O2), according to the unnamed sources. The company plans to hold the sale this year, although the final size will depend on demand, the person said. Telefonica had earlier explored the possibility of a merger of its local unit with E-Plus, the German wireless business of the Netherlands’ KPN Telecom, which at the time was fending off an unsolicited offer by Mexico-based America Movil (AM). However, last month KPN announced it had failed to find a buyer for E-Plus, citing ‘adverse conditions in financial markets’ as the reason behind the collapse of talks, and shortly after AM succeeded in its bid to increase its stake in the Dutch telco to 28%.
In other news, KPN has reportedly hired UBS for a sale of thousands of E-Plus’ mobile phone towers, Reuters cites two people familiar with the matter as saying. According to one of the sources, infrastructure funds are the most likely buyers for the asset, adding that E-Plus would lease back the towers as part of the deal, which could raise EUR300 million-EUR400 million.