Telecoms company KPN is selling its German subsidiary E-Plus to Spanish group Telefonica for €5bn in cash and 17.6% of Telefonica’s German operations.

The announcement was made the presentation of KPN’s second quarter figures. The company said it wanted to focus on its key markets of the Netherlands and Belgium. The deal is still subject to regulatory approval.

The proceeds of the sale will be used to improve the former state monopoly’s financial position. KPN is currently investing heavily in the establishment of a 4G network in the Netherlands.

KPN reported an 8% drop in group turnover over the second three months of the year, at €2.9bn. Operating profit fell 11% while net profit plunged 68% to €108m. KPN did manage to increase its share of the Dutch mobile market from 39% to 41%.

In a statement, chief executive Elco Blok said first half conditions remained challenging.