Spanish telecom company Telefonica has agreed to sell its mobile phone masts owned by its Telxius division in Europe and Latin America to American Towers for €7.7 billion in cash.

Telxius, which is partly owned by investment fund KKR and Zara owner Amancio Ortega's investment vehicle, will hand over more than 30,000 mobile phone masts in Spain, Germany, Brazil, Peru, Chile and Argentina. 

US-based telecom infrastructure operator American Towers will then lease the phone masts back to Telefonica. 

The sale is part Telefonica's multi-year strategy to reduce its debt by focusing on more profitable businesses and exiting less profitable markets such as those in Latin America. 

Telefonica chief executive José María Álvarez-Pallete said the deal meant the firm could focus on its "more ambitious goals".

This includes a deal to merge its British operations under the O2 brand with Virgin Media, the acquisition of Brazilian carrier Oi's mobile assets and debt reduction.

The Spanish company will use proceeds of the sale, which include a capital gain of about €3.5 billion, to reduce its net financial debt by €4.6 billion.

As of September, its net financial debt was 2.77 times its core adjusted earnings. 

For American Towers, which dwarves its main European rival Cellnex, the deal gives it access to the European market that is becoming increasingly attractive with the rollout of 5G technology. 

Cellnex has already built up a mobile phone network spanning most of the European markets, while Vodafone is planning to list its own mobile phone infrastructure unit Vantage towers in Frankfurt.