Telefónica Tech is engaged in offering digital transformation and system integration services. Credit: viewimage/Shutterstock.

Telefonica is looking to sell a stake in its technology business (Telefonica Tech), reported Bloomberg, citing unnamed sources.

The Spanish telecommunications company has been in touch with investment funds to assess their interest in buying a stake in the unit, the sources said.

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If Telefonica manages to sell the stake, the deal could value Telefonica Tech at over €2bn ($2.1bn), they added.

The talks are still ongoing and there is no guarantee that the Madrid-based company will proceed with the divesture.

According to one of the sources, despite interest of investment funds being in line with expectations, Telefonica is still deciding whether it should hold off divesting a stake until the technology unit has grown more.

Telefonica’s representative refused to comment on the development.

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Telefonica Tech is engaged in offering digital transformation and system integration services to both businesses and public administrations.

The company provides services in cyber security, internet of things (IoT), cloud, big data, blockchain, and artificial intelligence (AI), according to its website.

Although it still smaller in comparison with Telefonica’s conventional telecommunications business, the IT unit has recorded faster revenue growth.

Sales at Telefonica Tech increased 36% year over year in the second quarter of 2023 to reach €456m, surpassing the Spanish group’s overall revenue growth.  

In November this year, Telefonica CEO Jose Maria Alvarez-Pallete is planning to unveil a new three-year strategic plan for the group.

Last month, Saudi Telecommunication Company (stc) acquired a 9.9% stake in Telefonica in a deal valued at €2.1bn (SR8.2bn).