LIMA, Feb 14 (Reuters) - Spanish telecommunications

giant Telefonica's Peru unit will file for bankruptcy

protection in the country, it said on Friday, amid a string of

asset sales around Latin America in recent years as the firm

looks to cut debt and invest in 5G.

The firm added that it has hired Kroll Advisory to assist in

the proceedings and will tap a member of the team to act as

Chief Restructuring Officer.

"The initiation of the restructuring process does not imply

liquidation, let alone bankruptcy," the company said in a

statement.

"Rather, it will allow the company to work with its

creditors and other stakeholders to continue to serve Peru,

protect its employees, strengthen its financial position and

ensure the sustainability of its business."

Separately, Telefonica said in a filing to the Spanish

stock market regulator that its Hispanoamerica unit had granted

a credit facility worth around 1.55 billion soles ($419 million)

to the Peru unit to meet its operational cash requirements.

"The financial situation of Telefonica del Peru has been

very negatively affected by tax contingencies that are more than

20 years old, as well as by administrative decisions which have

placed the company in a competitive disadvantage within a

particularly challenging market environment," it said.

"Telefonica reiterates that Telefonica del Peru's

liabilities are not guaranteed by any other company of the

Telefonica Group," it added, saying it would continue to

"explore strategic alternatives" regarding its Peru investment.

Peru's competition watchdog, meanwhile, said it had 90

working days to respond to the filing.

The announcements came the same day Spanish newspaper

Cinco Dias reported, citing unidentified financial sources, that

Telefonica had hired investment bank JPMorgan ( JPM )

to sell its Mexican business

.

The newspaper said Telefonica was planning to sell the

unit before its annual shareholders' meeting, typically held in

April or May.

Local media have also reported that Telefonica has put

its Argentine business up for sale and the company has said it

is seeking to sell a majority stake in its

Colombian

unit to New York-listed Millicom.

Telefonica unexpectedly

replaced

CEO Jose Maria Alvarez-Pallete last month.

Elena Maestre, the CEO of Telefonica's Peru unit, said

in a statement the firm had decided to enter the proceedings

after evaluating various alternatives.

"We are focused, together with employees and suppliers,

on guaranteeing Telefonica del Peru's long-term permanence in

order to bring the best technology to our customers, while

meeting our regulatory commitments," she said.

($1 = 3.6990 soles)