In a statement to the local market regulator on Tuesday, Telefonica would be selling a controlling interest of its local business in the Czech republic. Investment group PPF would be acquiring a 65.9% ownership stake in Spanish telecom company's Czech unit for EUR2.47 billion or USD3.3 billion.

Telefonica would be receiving EUR2.06 billion in cash upon the completion of the transaction. The rest of the amount would be received in a series of payments for the next four years. Telefonica's Cezch unit would also be paying EUR260 million in dividends to its parent company on November 11.

Telefonica said the deal would help the company cut its massive debt by EUR2.69 billion. It would also take a hit in its third quarter earnings amounting to EUR56 million.

Bernstein analyst Robin Bienenstock said in a note to clients, "This transaction reduces Telefonica's debt and leaves them flexible to participate in Brazilian consolidation (a bid for TIM Brasil) and further investments in Europe."