Spanish telecommunications operator Telefonica plans to sell off its Colombia stakes to finance its debt, reported the Financial Times on Wednesday.

Telefonica currently controls 70% of the Colombian telecommunications company, Telecom. The communications giant is considering listing a minority stake (up to 19%) in an initial public offering (IPO), in order to become publicly traded.

Telefonica plans to meet with the Colombian government, which currently holds 30% of shares in Telecom, this month to discuss the issue. The company would need the permission of the Colombian government to offer public shares of Telecom.

According to Bloomberg, Telefonica could raise nearly $653 million by selling off 19% of its shares in the country. This will aid the telecommunications operator’s proposed $5.6 billon in cuts planned for 2013.

In 2012, Telefonica’s wholly owned wireless division (Movistar) merged with their landline venture – partly owned by the Colombian government – to consolidate their ownership in Telecom, bringing their holdings in the company to 70%. A move which Bloomberg reports shaved off some $1.7 billion in debt from the Spanish company.

A Dow Jones Newswire report from 2011 suggests that the government’s incentive for reducing its holdings in Telecom were partly in response to a “financial weakening of the company during recent years” that could create an “enormous risk” in terms of the company’s ability to meet pension payments and other obligations.

BACKGROUND: Govt seeks to divest from Telefonica controlled Telecom

The Financial Times reports that Telefonica currently holds $66.8 billion worth of debt.

Sources

• Telefonica considers listing Colombia arm
• Telefonica is said to plan IPO in Colombia to help cut debt
• Initial Public Offering definition