Hutchison Whampoa pays €0.85bn for Irish business of Telefonica

Spanish telecommunication group Telefónica S.A. Monday said it has agreed to sell its 100 percent share in Telefónica Ireland, Ltd., to Hutchison Whampoa Group for 850 million euros, with a view to reducing debts.

Telefónica said it will receive initial cash consideration of 780 million euros at closing of the deal, and an additional deferred payment of 70 million euros based on completion of the agreed financial objectives.

The transaction is part of Telefonica’s policy of proactive management of its portfolio of assets, and initiatives to increase its financial flexibility. The Hong Kong-based conglomerate Hutchison Whampoa owns the Three mobile brand in Ireland.

According to Telefónica, the agreement is expected to positively impact reduction of its net debt position by about 780 million euros, without considering the additional deferred payment. This will help the company reach closer to its goal of a net debt level below 47 billion euros in 2013.

The deal is subject, among other conditions, to relevant competition approvals.

Recently, Bloomberg reported that telecom giant AT&T Inc. has explored potential deals in the last two months, including buying a stake in Telefonica or some of its foreign assets. According to the report, AT&T approached Spanish authorities to discuss its interest in buying about a 29.9 percent stake in Telefonica, but the proposal was not welcomed.

However, Telefonica had said that it did not receive any approach or any indication of interest from any party.