"Telefonica is exploring strategic options in relation to its stake in Telefonica Czech Republic, including conversations with investor group PPS, with nothing certain regarding whether an agreement will be reached, or final terms and conditions," it said in a statement.
Telefonica currently holds 69.41 percent of the Czech company, which has a client base of 9.3 million in the Czech Republic and Slovakia.
Its stake in Telefonica Czech Republic, which was listed in 2005, is worth around €2.9 billion ($3.9 billion), according to the share price value on Tuesday.
Telefonica aims to reduce its debt to under €47 billion by the end of the year. It stood at €49.8 billion as of the end of June.
The former state monopoly 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 850 million euros.
At the same time Telefonica 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.