MADRID, July 23 (Reuters) - Spanish telecoms firm Telefonica said on Tuesday its debt target of under 47 billion euros ($62 billion) by year-end would be unaffected by its purchase of Dutch group KPN’s German business E-Plus.
Telefonica said in a stock market notice its subsidiary Telefonica Deutschland would seek shareholder approval for a capital hike to raise cash for the deal. The company said it would subscribe to its 2.84 billion euro ($3.75 billion) share of the 3.7 billion euro capital hike.
The company reiterated its debt target and said the deal would improve its risk profile. High leverage has been a sticking point for Telefonica, which has recently shed assets including its Irish business to keep a lid on debt.
KPN will sell E-Plus to Telefonica for 5 billion euros in cash and a 17.6 percent in the newly-created company. Telefonica said the deal should be completed in the first half of 2014.