MADRID (Reuters) -Spanish telecoms company Telefonica has sold its unit in Argentina for $1.245 billion to Telecom Argentina as part of its strategy to gradually reduce its exposure to Latin America, it said on Monday evening.

The signing and closing of the transaction took place on Monday, Telefonica said.

The deal has sparked concerns in Argentina, where President Javier Milei's office issued a statement saying it would take necessary steps to prevent the formation of a monopoly.

"This acquisition could leave approximately 70% of telecommunications services in the hands of a single economic group," his office said in a statement. "The state will take all pertinent measures to avoid this."

The deal is the latest in a series of moves by foreign firms to exit their holdings in South America's No. 2 economy as it struggles with hyperinflation.

In recent years, Telefonica has made a series of asset sales across Latin America as it seeks to cut debt and invest in 5G.

Earlier this month, it announced its Peruvian unit would file for bankruptcy protection, and local media have also reported plans to sell off assets in Mexico and Colombia.

The deal marks the first corporate transaction by the Spanish telecommunications giant since Marc Murtra took over as CEO in January, replacing Jose Maria Alvarez-Pallete.

Telecom Argentina, partly owned by Argentine media conglomerate Clarin Group, said in a statement that purchasing the Telefonica assets was a part of its strategy to continue investing in the country and accelerate its 5G and fiberoptic rollouts.

Telecom Argentina also bought a stake from French operator Orange in 2014, as the European giant sought to exit some Latin American markets.

Shares of Telefonica rose 1.5%, while Telecom Argentina gained 3.4%.

($1 = 0.9545 euros)

(Reporting by Jesús Aguado in Madrid and Eliana Raszewski, Maximilian Heath in Buenos Aires; Writing by Natalia Siniawski; Editing by Emma Pinedo and Andrei Khalip, Sandra Maler and Richard Chang)