PRAGUE--Telefonica Czech Republic AS (BAATELEC.PR), a unit of Spain's Telefonica SA (TEF), Tuesday reported a 23.5% drop in third-quarter net profit, coming below market expectations, on lower revenues as flat calling plans for mobile services weigh on the company's revenue.

MAIN FACTS:

--Net profit in the third quarter through end-September came in at 1.35 billion koruna ($70.5 million), down from CZK1.76 billion a year earlier. The result was worse than market expectations for CZK1.39 billion in consolidated profit.

--The company reported a 7.2% drop in revenue, to CZK11.67 billion from CZK12.59 billion a year earlier. Third-quarter revenue came in below market expectations for CZK11.76 billion.

--Operating income before depreciation and amortization, or Oibda, in the three months through to the end of September came in at CZK4.89 billion, down 7.2% from CZK4.54 billion. Analysts had expected Oibda at CZK4.92 billion.

--Telefonica's parent has agreed to sell its 65.9% stake in its Czech unit, valued at about 2.47 billion euros ($3.33 billion), to PPF Group NV, a Czech-based private equity firm of local billionaire Petr Kellner. Telefonica will retain a minority stake of 4.9% in the Czech company after completing the transaction and will allow PPF Group to use its O2 brand for up to four years.

Write to Leos Rousek at leos.rousek@wsj.com

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