Telefonica has sold a controlling stake in its operation in the Czech Republic to the PPF investment group for €2.47 billion, part of the Spanish operator’s ongoing mission to focus on core markets and pay off debt.

PPF, controlled by billionaire Petr Kellner, is acquiring a 66-per-cent stake held by Telefonica in the Czech operator.

Telefonica Czech Republic also includes operations in Slovakia which will be acquired by PPF.

The Spanish operator will maintain a 4.9 per cent in the Czech operator and will remain as a commercial and industrial partner for four years.

Although the Czech and Slovakian holding companies will change their names, the operator will continue to use the O2 brand for a period of four years.

The Czech disposal follows on the back of similar deals by Telefonica this year to sell down interests in Ireland, Central America and Germany to reduce debt.

The target is to reduce net debt to below €47 billion by the end of 2013.

Meanwhile, the company is looking to build up its interests elsewhere, for instance in a gradual stakebuilding in Telecom Italia which could give it a role in the consolidation of the Brazilian mobile market.

The sale in the Czech Republic operator will deliver €2.06 billion in cash to Telefonica upon completion of the deal and a deferred payment of €400 million over four years.

Before transferring the shares, Telefonica will also receive an additional €260 million in a dividend payment from the Czech unit on 11 November.

PPF is expected to launch a tender offer for the remaining 31 per cent in Telefonica Czech Republic, which is a free float on the Czech stock exchange.

Telefonica is the second-largest mobile operator in the Czech Republic with an estimated subscriber base of 5.12 million subscribers (GSMA Intelligence Q3, 2013 figures) but has suffered in an intensely competitive market into which the country’s regulator wants to add a further entrant.

In addition, it has an estimated 1.46 million mobile subscribers in Slovakia, making it the country’s third-largest operator.