Telefonica is reportedly getting creative in its battle to reduce debts as it backs Mediaset in an on-going legal battle against Vivendi.

According to Reuters’ sources, Telefonica has not only grabbed a bit of cash in selling its 11.1% stake in pay TV business Premium back to Mediaset, but it has somehow managed to negotiate a slice of the damages Mediaset could potentially gain in an on-going legal dispute with Vivendi. Telefonica is drowning in over €50 billion of debt; understandably it is trying anything and everything to reduce the burden.

The Spanish giant has tried to offload its British mobile brand O2, before competition authorities got in the way, ventured into the fast growing world of e-Gaming and also tried to IPO its mast business Telxius, which proved to be a complete failure. You have to feel a bit sorry for the Telefonica executives; they are trying their best, but can’t seem to catch a break.

The latest effort could either be a good one, or a complete failure. Although it has not been revealed how much cash Telefonica got by selling its 11.1% passive stake back to Mediaset, you would assume that there was some sort of discount to allow it to put a claim in for the damages.

Mediaset has been in a battle with Vivendi for the last couple of months, after the French business pulled out of a deal to acquire Premium. Mediaset is now suing for €1.5 billion, which Telefonica would reported receive 11.1% of, but it could also end up with nothing, should the judges rule in favour of Vivendi. It’s a bit of a gamble, and may indicate things are starting to get a bit desperate in Madrid.

We heard there might be a horde of Telefonica branded t-shirts going on sale on eBay before too long; keep an eye on this space.