Telefonica will retain a minority 4.9% share in Telefonica O2 Czech Republic and will remain its industrial and commercial partner for the next four years, it said in a statement.
Telefonica 02 Czech Republic has 9.3 million customers in the Czech Republic and Slovakia.
It earned net profits of €262m ($354m) on almost €2bn of sales last year.
Under the deal PPF, owned by the wealthiest Czech, Petr Kellner, is entitled to use the O2 brand name for another four years.
News of Telefonica's plan to sell its Czech unit first surfaced two months ago.
Telefonica aims to reduce its debt to less than €47bn by the end of the year. It stood at €49.8bn as of the end of June.
Telefonica said the sale of its Czech unit would reduce the company's net debt by around €2.685bn and allow it to meet its debt target for the end of the year.
"With this transaction Telefonica continues to successfully execute its strategy of increasing financial flexibility and strengthening the operations in its core markets," it said.
Telefonica has sold a number of assets to reduce its debt load, including its Irish division O2, which it sold to Hutchison Whampoa in June for €850m.
At the same time the former state monopoly is trying to take part in the consolidation of the European telecoms sector which is currently underway.
Earlier this year Telefonica reached deals to acquire control of Dutch telecom firm Ken's German business E-Plus and to increase its stake in Telecom Italia.
Source: AFP, via I-Net Bridge
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