Dutch telecom operator KPN announced on Tuesday it has sold its German subsidiary E-Plus to Spain's Telefónica for €5 billion ($ 6.6 billion) in cash and a 17.6 percent stake in Telefónica Deutschland.

The deal creates the biggest operator on the German market, as measured by subscribers, and puts an end to a long hostile effort by Mexico's America Movil to take over the KPN unit.

KPN is controlled by Mexican tycoon Carlos Slim.

The announcement comes as KPN announced a 68-percent fall in net profit for the first half of 2013 to 108 million euros. Sales in the period were off 8.1 percent from the figure a year earlier to 2.93 billion euros, the company said.

"Conditions remained challenging in the first half of 2013, however we have further strengthened our market positions," chief executive Eelco Blok said.

Following the green light from the authorities, the sale should allow for €5.5 billion in efficiencies on the German mobile communications market, KPN said in a statement.

"KPN will use most of this money to increase its financial flexibility and intends to resume payments of dividends to stockholders for 2014," the company said.

The announcement comes as KPN announced a 68 percent fall in net profit for the first half of 2013 to €108 million. Sales in the period were off 8.1 percent from a year earlier to €2.93 billion, the company said.

Germany is Telefónica's third biggest European market after Britain and Spain.