British telecom group Vodafone agreed Monday to sell its Hungarian division to local peer 4iG and state-owned holding company Corvinus Zrt for 1.8 billion euros ($1.8 billion).

The London-listed giant added in a statement that the proposed sale would create Hungary's second largest fixed-line and mobile telecoms operator.

"This combination with 4iG will allow Vodafone Hungary ... to play a major role in the future growth and development of the sector as a much stronger scaled and fully converged operator," added Chief Executive Nick Read in the statement.

"The combined entity will increase competition and have greater access to investment to further the digitalization of Hungary." The sale "also supports the Hungarian state's goal of creating a national ... champion" in information and communications technology.

A Vodafone spokesperson said proceeds would be used to deleverage its balance sheet, or cut debt, as it looks to build scale in other markets.

European heavyweight Vodafone, which has been restructuring for several years, expects the sale to be complete by the end of 2022.

As part of this strategy, Vodafone spun off and listed its phone masts division, Vantage Towers, on the German stock market last year.