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By Denny Thomas and Tracy Rucinski
HONG KONG/MADRID (Reuters) - Spanish telecoms giant Telefonica SA (MC:TEF) sold half of its 5 percent stake in China Unicom (Hong Kong) Ltd (HK:0762) on Monday for $854 million (538.53 million pounds), raising fresh funds for acquisitions.
Telefonica has been selling stakes in non-core assets for the last two years in order to raise money for acquisitions in Europe and Latin America, particularly in Brazil, where it is already a leading competitor.
It has agreed to buy Brazilian broadband business GVT for $9 billion and plans to fold it into its Vivo-branded mobile phone business in Brazil to create the country's biggest telecom group.
Sources have also told Reuters it could team up with Brazil's Grupo Oi (SA:OIBR3) and Mexico's America Movil (MX:AMXL) to place a joint bid worth around 32 billion reais ($13 billion) for Brazilian telecoms firm TIM Participações (SA:TIMP3).
Telefonica sold 597.8 million China Unicom shares in a block trade at $HK11.14 each - at the bottom end of an up to $11.34 targeted range - according to a term sheet seen by Reuters before the sale, representing a 3 percent discount to the last traded price.
The sale follows Telefonica's disposal of half of its China Unicom stake in 2012 for $1.4 billion, and leaves the Spanish company with a holding of about 2.5 percent, according to Thomson Reuters data.
Bank of America was the sole placement agent for the stake and Telefonica is barred from selling any more China Unicom shares for the next 90 days, the term sheet showed.
The Spanish group is due to release nine-month results on Wednesday, with investors continuing to watch debt, which rose by 1 billion euros ($1.2 billion) in the second quarter to 43.8 billion euros.
(Reporting by Umesh Desai in Hong Kong and Julien Toyer in Madrid; Editing by Elaine Hardcastle and Pravin Char)