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Telefonica Sells Hispasat Stake for $164 Million to Reduce Debt

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Feb. 21 (Bloomberg) -- Telefonica SA said it will sell its stake in satellite company Hispasat SA for 124 million euros ($164 million) to Abertis Telecom as Spain’s biggest phone operator disposes of assets to reduce debt.

The sale of the 13.23% holding to Abertis Infraestructuras SA’s telecommunications unit is subject to government approval, Madrid-based Telefonica said in a statement today. Telefonica’s debt at the end of September was 55.43 billion euros.

“The sale is positive for Telefonica but it’s still too small to cut debt in a significant way,” Andres Bolumburu, a Madrid-based analyst at Banco Sabadell, said by phone. “All steps taken toward cutting debt are good, but the company really needs to keep selling more non-core assets and more valuable ones.”

Telefonica cut its dividend in December for the first time in a decade as Europe’s sovereign debt crisis hurt business. Telefonica has reduced its stake in Hispasat from more than a fifth since the satellite company was set up in 1989 and will have no remaining holding after the sale to Abertis.

Telefonica reports fourth-quarter earnings on Feb. 24 before the stock market opens in Madrid.

Toll-road operator Abertis owns 33.4 percent of Hispasat, while several state-owned entities own 25.7 percent, according to a presentation sent by Telefonica today.

Telefonica shares have slipped 1.5 percent this year, underperforming the 2.3 percent gain of the IBEX 35 Index, and valuing the company at 60.2 billion euros.

To contact the reporter on this story: Manuel Baigorri at mbaigorri@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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