Prague - PPF, a Czech investment company, has announced that it has reached an agreement with Spanish telecommunication company Telefonica to acquire a 65.9 percent stake in Telefonica Czech Republic for CZK 63.6 billion (EUR 2.5 billion).
PPF, owned by Czech billionaire Petr Kellner, will finance the acquisition partially by its own cash sources (CZK 35.5 billion), partially with a loan from Societe Generale.
PPF won't become fourth Czech mobile operator
The 65.9 percent stake in Telefonica Czech Republic also includes a 100 stake in Telefonica Slovakia. Both companies will change their name and operate under the O2 brand.
Shortly before the acquisition was confirmed, Telefonica Czech Republic announced that its net profit dropped 25 percent to CZK 3.7 billion (EUR 143 million) from January to September this year. Consolidated operating earnings decreased by 5.8 percent to CZK 35.6 billion, the company said in a press release
"The transaction is expected to help reduce the Telefonica group's debt. (The debt) is projected to drop by EUR 2.685 billion," said Telefonica spokesman Hany Farghali.
Telefonica serves more than five million mobile clients and 1.5 million fixed lines in the Czech Republic and 1.42 million mobile clients in Slovakia. The company employs 5,678 people in the Czech Republic and is the country's sixth biggest taxpayer.
Telefonica Czech Republic was established in 2005 when Spain's Telefonica acquired state-run fixed line operator Cesky Telecom and mobile operator Eurotel.
The size of the transaction is equal to another deal made by PPF earlier this year. At the beginning of 2013, PPF sold Ceska Pojistovna to Generali for EUR 2.5 billion. These two transactions are expected to be the biggest deals of 2013 in the Czech Republic.
