Spain's largest telephone company, Telefonica SA agreed to sell its Irish unit to Hutchison Whampoa Ltd. The deal was priced as much as Eur850 million. The net proceeds of the sale was intended to cut the company's debt as part of its debt reduction strategy.

The deal will be paid off with Eur780 million in cash. An additional Eur70 million will be given after reaching specific performance targets. This was stated by the Madrid based company today.The sale will help Telefonica reduce debt by about Eur780 million. However, it is still pending regulatory approval.

The deal did not account additional payment which brought Europe's most indebted company closer to its focus of brining net debt below Eur47 billion this year. Last year, the company incurred a total of Eur51.2 billion. 

Hutchison's Three Ireland arm is the third biggest mobile phone operator in the country. It failed its offered bid of Eur2 billion last year for Eircom Group, Ireland's biggest phone company.