LONDON â€" The Spanish telecommunications company Telefónica agreed on Monday to sell its Irish unit to Hutchison Whampoa of Hong Kong for up to 850 million euros, or $1.1 billion, the latest effort by the European company to reduce its large debt burden.
The Spanish company, whose operations span its domestic market, Latin America and the rest of Europe, has been shedding assets and spinning off divisions in a bid to reduce its roughly 50 billion euros of debt.
Under the terms of the latest deal, announced on Monday, Hutchison Whampoa will buy Telefónica Ireland for an initial 780 million euros, and pay a further 70 million euros, depending on whether the unit hits certain financial targets.
The acquisition is the Asian company's latest deal in Europe after it bought Orange Austria, another European cellphone operator, earlier this year.
The Continent's telecoms and cable sector remains one of the few bright spots in a moribund European mergers a nd acquisitions market, as local companies hold off on major deals because of Europe's sluggish economy.
A few deals, particularly in the technology industry, are sneaking through. On Monday, the British telecommunication giant Vodafone also agreed to buy the German cable operator Kabel Deutschland for $10.1 billion, one of the largest European deals announced so far this year.
For Telefónica, the sale of its Irish units comes at it tries to reduce its debt to below 47 billion euros by the end of the year. The Spanish company has been hit by its home market's struggling economy, where unemployment has skyrocketed and local businesses remain burdened with large amounts of debt.
In response, the company has already spun off its German subsidiary, Telefónica Deutschland, in Europe's largest initial public offering last year, while also offloading some of its Latin American operations. Analysts say potential further Latin American divestitures, either through sales or spin-offs, could be in the cards.
The company, based in Madrid, was forced to deny rumors last week that AT&T had considered a $93 billion bid for Telefónica, which Spanish media reports suggested could have been blocked by local politicians for national security reasons.
Shares of Telefónica fell 1.1 percent in early afternoon trading in Madrid on Monday.
