BT could buy O2 or EE to get back into the mobile carrier game

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The British fixed-line carrier BT is in preliminary talks to buy mobile operator O2 from its Spanish parent, Telefonica, it said on Monday. It is also reportedly considering buying EE.

In a statement, [company]BT[/company] said it was looking to buy a mobile carrier and had “received expressions of interest from shareholders in two U.K. mobile network operators, of which one is [company]O2[/company], about a possible transaction in which BT would acquire their UK mobile business.”

According to the Financial Times’ sources, the other carrier is EE, the joint venture between [company]Deutsche Telekom[/company] and France’s [company]Orange[/company]. BT currently provides mobile services to small businesses in the U.K. as a mobile virtual network operator (MVNO), using EE’s network.

“We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements,” BT said. “We remain confident of delivering on these plans and have also been exploring ways of accelerating them, including assessing the merits of an acquisition of a mobile network operator in the U.K.”

BT made its statement following Spanish reports about [company]Telefonica[/company] striking a “strategic alliance with British Telecom to create a European giant” that would take on the might of the U.S. carrier [company]AT&T[/company]. O2 has been making noises about selling itself off for months.

O2 UK actually began life as BT Cellnet, before the British incumbent made what many see as an ill-advised decision to get out of the mobile carrier business in 2005 by selling it to Telefonica. It became apparent that BT wanted to get back into the business in early 2013, when it spent £186 million ($292 million) on 4G spectrum in a long-awaited auction.

Given the amount of spectrum BT, O2 and EE hold in combination, and other potential competition concerns, it is unlikely that BT would buy more than one mobile carrier, if indeed it buys one at all. One thing that’s worth noting, though, is that new EU digital economy commissioner Günther Oettinger has indicated that he favors greater consolidation in the European telecommunications industry, to create stronger regional players.

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