Telefonica talks on HanseNet in final stages

By Sarah Morris

SEVILLE, Spain (Reuters) - Europe's largest telecom Telefonica (TEF.MC) has made progress on talks for two small but key acquisitions, Spanish pay-TV firm Digital+ and German broadband operator HanseNet, executives said on Friday.

HanseNet would build Telefonica's internet muscle in Germany, while Digital+ would provide it with content for its pay-TV venture Imagenio.

"(Talks on Digital+) are on the right track," Chairman Cesar Alierta told reporters at a telecoms conference in Seville.

The news sent shares up in ailing media group Prisa (PRS.MC), which has been trying to sell Digital+ for some time. Prisa has been selling assets to try to pay down a 5 billion euro debt pile and reshape its media business.

As regards HanseNet, worth 1.5-2.0 billion euros according to analysts, Telefonica said earlier this month that it was a question of agreeing to an acceptable price with its Italian parent.

"We are in the final stages of talks," said Telefonica's Chief Operating Officer Julio Linares.

HanseNet would add strength for Telefonica in Germany, where it is the fourth biggest operator and competes with incumbent Deutsche Telekom (DTEGn.DE).

As regards Digital+, Prisa rejected a joint bid from Telefonica and Viviendi (VIV.PA) for its pay-TV arm last year as too low.

Telefonica has since said it is still interested in a minority stake in Digital+ with a partner. But it is not now clear whether it might buy a stake alone or in concert.

(Writing by Elisabeth O'Leary; Editing by David Cowell)