By Julien Toyer and Sarah White, Reuters

Spanish telecoms group Telefonica (TEF.MC) said on Tuesday it would raise up to 1.5 billion euros ($1.68 billion) with the initial public offer of shares in Telxius, its telecoms masts business, as it tries to reduce its debt.

The Telxius share flotation comes after the sale of its British mobile network operator O2 UK to rival operator CK Hutchison (0001.HK) for 10.25 billion pounds ($13 billion) was blocked by Europe's competition regulator earlier this year, piling pressure on the Spanish group to find other ways to cut its 53 billion euros of debt.

The company said in a prospectus filed with Spain's stock market regulator on Tuesday that it aimed to sell up to 40 percent of Telxius, including a discretional option to sell extra shares if demand is strong.

Otherwise it will sell 36 percent, or 90.9 million shares. They will be marketed at between 12 and 15 euros each – valuing Telxius as a whole at up to 3.7 billion euros – and Telefonica aims to have the shares admitted to trading in Spain on Oct. 3.

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