The Spanish telecom company, Telefonica S.A. (ADR) (NYSE:TEF), announced Wednesday that it is planning to come up with an IPO for its O2 German Unit, with proceeds being utilized for paying the old debt pile of more than 58 billion euros ($75 billion). The telecom company plans to take the unit public on the Frankfurt Stock Exchange by the years end.

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“We are convinced that an I.P.O. will enable us to raise our profile further, and to continue the successful growth story of Telefónica Deutschland in Germany in the long term,” René Schuster, the chief executive of Telefónica Deutschland, said in a statement.

Spain’s biggest phone company is still unsure on the number of shares that will be offered to the public. But, according to the people familiar with the matter, the initial public offering may raise as much as 1.5 billion euros, and value the unit at 7.5 billion euros. Company also announced distributing about 500 million euros in dividends next year, to attract potential investors, and forecasts that the dividend will increase in coming years.

“This is a very significant milestone in the company’s attempts to cut debt, not only because of the amount it can raise, but also because it will be key for further asset sales, such as its call-center unit, Atento, and a share sale in Latin America,” Nuno Matias, an analyst at Espirito Santo in Lisbon, said by phone. “We still need to know what percentage of capital Telefonica S.A. (ADR) (NYSE:TEF) plans to sell, as well as the valuation”. Telefonica S.A. (ADR) (NYSE:TEF) is forced to sell its assets due to falling profit and increased competition in the domestic market. The company is also offloading its German and Latin American units to repay the debt taken for earlier acquisitions. In July, the Spanish company scrapped a 1.50 euro-a-share dividend for 2012, but it is expected to pay half of the dividend in the last quarter of 2013. Telefonica’s German business posted a net income of 55 million euros for the first half of the year, up from 23 million euros a year earlier.

Clouded by the European crisis, it is not the only Spanish company to sell its assets to overcome the credit crunch. Last week, Banco Santander, S.A. (ADR) (NYSE:SAN) came up with an initial public offering for its Mexican unit. A 1.5 billion-euro IPO of the German unit would be the biggest in Germany, since engine maker Tognum AG (TGM) raised 1.8 billion euros in 2007.