MADRID, July 7 (Reuters) - Telefonica has sold a 54% stake in its fibre optic network in Peru to U.S. private equity fund KKR and 10% to Entel's local business, the Spanish telecoms group said on Friday, adding that it will retain the remaining 36%.

Over the past few years, Telefonica has carried out a series of asset sales to reduce debt and to help fund the hefty investment required to build 5G mobile networks.

In many markets, the company has separated the infrastructure into different units to maximise the value of its disposed assets.

The Spanish company did not disclose the value of the transaction but said the deal would cut its debt by 200 million euros ($217.8 million).

The transaction valued 100% of the unit at about 550 million euros, including debt, according to a banking source close to the deal.

The new company, Pangeaco, will combine the existing fibre optic network in Peru from Telefonica and Entel, KKR firm said in a separate statement.

The private equity fund added that it planned to invest $200 million to accelerate the expansion of the digital infrastructure to more than double the size of the network to reach at least 5.2 million homes across Peru by the end of 2026.

Santander advised Telefonica on the deal, the source said. (Reporting by Inti Landauro; Editing by Jacqueline Wong and David Goodman)