Telefónica is in talks to sell its Colombian unit to Latin American telecoms group Millicom International Cellular, according to a Bloomberg report.

The publication notes that the telco is exploring a sale as it aims to reduce its holdings in Latin America and its debt.

Millicom is reportedly in negotiations to buy Telefónica's stake in Telefónica Colombia for $400 million in cash.

Telefónica, which owns a 70 percent stake in the telco, has confirmed talks are underway.

The Spanish carrier has been looking to consolidate its operations in Latin America since 2019 as it looks to cut overall debt and reduce exposure to currency swings.

Colombia's government holds the remaining 30 percent stake in the carrier, which was founded in 1947.

As of the end of the first quarter of this year, Telefónica Colombia has around 24.4 million customers, with 20.7 million of those mobile subscribers.

The carrier also has 1.5 million broadband customers, 841,000 pay TV, and 1.4 million fixed lines in service.

Millicom's Colombian subsidiary Tigo is Colombia's third-largest operator with more than 15 million customers.

Millicom is the subject of a potential takeover itself, with French telco Iliad Group interested in buying out the company through Atlas Investissement the investment vehicle of French billionaire and Iliad founder Xavier Niel.

However, Millicom's board of directors said the $4.1 billion bid undervalues the company.