Report: Permira Selling Debitel

Permira will next week sign a contract to sell German telecommunications company Debitel AG to rival Freenet AG for about 1.4 billion euros in cash and shares, Platow Brief reported, citing sources.

The deal will create Germany's third-biggest mobile phone service company, after Deutsche Telekom AG.'s T-Mobile and Vodafone Group, with about 20 million customers, the newsletter said.

Permira will retain about 25 percent of the new merged entity.

Permira may give Freenet a loan to pay the cash component of the sales price, Platow Brief said. Freenet also still plans to sell its DSL operations to raise funds, it said, though it is now uncertain whether the company will fetch between 600 million euros and 700 million euros, as planned.

Separately, Manager Magazin reported in its online edition Freenet is planning to close a large number of stores after buying Debitel, cutting an unspecified number of jobs.

maria.sheahan@thomson.com