Telefonica sells Central American assets for $500 million

Spain's Telefonica has signed a deal to sell 40 percent of its assets in four Central American countries to Corporacion Multi Inversiones (CMI) for $500 million, as part of its drive to cut debt.

The Spanish telecoms group, which made a series of asset disposals last year, is fighting to reduce net debt to below 47 billion euros ($62 billion) in 2013 from 51.3 billion euros in 2012.

The price of the sale could increase by up to $72 million according to future performance, valuing the assets at 6.5 times earnings before interest, taxes, depreciation and amortization (EBITDA), Telefonica said in a regulatory filing on Tuesday.

For the deal, Telefonica will spin off the assets from Guatemala, El Salvador, Nicaragua and Panama into a new group which it will continue to control, opening the door for future local partnerships with CMI.

Central America, with 30 million inhabitants - a third of which are under the age of 15 - and a growing middle class, remains a key area of growth potential compared to largely saturated European markets.

Telefonica's shares, which have gained 9.4 percent so far this year, closed on Monday at 11.15 euros.

($1 = 0.7634 euros)

(Reporting by Paul Day; Editing by Tracy Rucinski and Mark Potter)