Telefonica is advancing plans to IPO its O2 Germany unit, reportedly signing up several investment banks to help it reach out to potential investors.

Bloomberg reports that the Spanish operator group has signed-up Bank of America, BNP Paribas, Citigroup and HSBC as bookrunners, while lead banks UBS and JP Morgan Chase are preparing analyst presentations. According to sources, the banks could begin gauging investor interest as early as the end of this month.

It is thought that Telefonica is discussing the sale of a 20 percent stake in O2 Germany in an effort to raise between EUR1 billion and EUR1.5 billion.

The group announced in May that it was mulling plans for IPOs in both Germany and in Latin America in an apparent move to raise cash to pay-down debt and guard against the deepening Eurozone crisis.

O2 Germany is Telefonica’s second-largest European unit (behind Spain) and is valued at about EUR8 billion. It has several businesses in Latin America, including units in the region’s two largest markets, Mexico and Brazil, though it has not specified in which ones it plans to sell stakes.

According to another Bloomberg source, the firm is still studying different scenarios for an IPO in Latin America and the timetable will depend on which unit is picked.

“Telefonica continues to work on its asset disposals program, and it’s trying to keep the majority of possibilities open in order to carry out the best option for each of them,”Jose Maria Alvarez-Pallete, head of Telefonica Europe, told reporters yesterday.

Telefonica’s market value has slumped significantly over recent quarters; the firm had net debt of EUR57.1 billion at the end of March. Its problems relate mainly to its domestic operations in Spain, which have been impacted by the country’s exposure to the Eurozone crisis.

“Since I took over this role, it’s been a tough year, perhaps even tougher than what we thought it would be for the company,” added Alvarez-Pallete.