Telefónica's debt problems look set to persist after the Spanish operator said it had abandoned plans for a sale of its Telxius infrastructure unit due to weak demand.
In a brief statement on its website, the company noted that offers it had received did not meet its expectations but said it would continue to look at strategic options for Telxius.
"Telefónica, in agreement with the joint global coordinators, has decided to abandon the offering, not considering adequate the valuation of the company Telxius implicit in the purchase offers received," said the company.
According to various press reports, Telefónica had been hoping to raise as much as €1.5 billion ($1.7 billion) from floating about 40% of Telxius, which manages undersea cables and mobile masts in Spain.
The setback will come as a further blow to Telefónica, which has been struggling to reduce its debt load after European authorities blocked the sale of its UK business to Hong Kong's Hutchison Whampoa earlier this year.
Telefonica appeared to have regarded the O2 sale as a "done deal" after negotiating an agreement with Hutchison, and had started treating O2 as a discontinued operation in financial reports.
Telefónica's net debt had risen to about €52.6 billion ($59 billion) at the end of June, equating to about 3.2 times its operating income (before depreciation and amortization) -- one of the highest such ratios among Europe's telco incumbents.
In June, Telefónica informed investors that it had stopped treating O2 as a discontinued operation, suggesting it had failed to identify an alternative buyer willing to pay an acceptable fee for the business. (See Brexit Batters Telefónica's O2 Sale Plans.)
Earlier this month, however, the operator said it was looking at various options for O2 including a possible IPO. (See Eurobites: Telefónica Mulls O2 UK IPO.)
— Iain Morris, , News Editor, Light Reading