July 16, 2012 / 12:07 PM / 5 years ago

Telefonica picks banks for O2 Germany IPO - source

FRANKFURT, July 16 (Reuters) - Spain's Telefonica has mandated JP Morgan and UBS to organise the planned listing of its German unit O2, a source close to the process said on Monday.

The initial public offering or IPO is set to take place later this year, the source said, adding the timing depended on the condition of capital markets, which have been nervous recently due to the European debt crisis.

Telefonica, which is under increasing pressure to slash its debt pile, reiterated that it planned to list O2 Germany, declining to comment further on the state of the preparations.

Telefonica needs to raise 7-8 billion euros ($8.6-$9.8 billion) a year through 2015 to cope with debt maturities and is also struggling with sinking revenue and profits in its home market of Spain, where one in four is unemployed and the banking industry is in crisis, pushing the state's cost of borrowing higher.

Analysts have put the value of Telefonica's German business at 8-10 billion euros, though it is seen as likely that the Spanish group will keep a controlling stake after the flotation.

Telefonica's O2 is the smallest operator in Germany after Deutsche Telekom, Vodafone and E-Plus .

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