O2 turns to franchises to help with Telefonica debt O2 said on Tuesday that it will offer 82 of its company-owned shops to local entrepreneurs to run, in return for investments of up to £500,000 each, in order to free up cash to plough back in the business. The move is the first clear signal that Telefonica's debt mountain is taking its toll on its British mobile unit, by limiting the amount of money available for investment. Telefonica's debt ballooned on the back of a decade-long acquisition spree, which saw the Spanish telecoms business expand in Europe, China and Latin America. It is now having to sell off many of the assets it bought in order to keep interest payments under control. On Tuesday, it raised €1.5bn by making an initial public offering for O2 Deutschland, its mobile business in Germany. The flotation - the biggest there has been in Europe this year - valued the business at €6.5bn. It has also raised €2.13bn from the sale of a minority stake in its Chinese business, China Unicom, and its Madrid call centre, Atento. However, Telefonica is running out of ways to raise the cash it needs and is going to have to cut costs or sell assets in Britain, analysts said. "They are clamping down on expenditure everywhere but it is very hard to do in Spain for political reasons so they are looking hard at O2 and its properties in Latin America instead," said Will Draper at Espirito Santo. O2 has 462 shops across the UK, just over 200 of which will be franchise operations by the middle of next year.