In the latest move in a broad deleveraging effort, Spanish telecom incumbent Telefonica (NYSE:TEF) has divested one of its European subsidiaries. The company announced that it has reached agreement to sell Telefonica Ireland to Hong Kong-based conglomerate Hutchison Whampoa Group. The potential total price is 850 million euros ($1.1 billion), 780 million euros ($1.0 billion) of which will be handed over at the closing of the transaction while 70 million euros ($92 million) will take the form of a deferred payment to be transferred when certain financial objectives are met.

Telefonica will use the proceeds of the sale to reduce its debt. The company's current deleveraging program aims to reduce total indebtedness to under 47 billion euros ($62 billion) this year. This would be down notably from the peak of 56 billion euros ($73 billion) the firm reached in 2011. Its current market capitalization is nearly 45 billion euros ($59 billion).

Fool contributor Eric Volkman has no position in Telefonica, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.