BT is in talks with Spain's Telefonica to buy its UK mobile network O2 as a quick way to re-enter the consumer mobile space it left in 2002.

BT admitted it was involved in negotiations in a statement: "All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur," BT said.

BT Tower Image credit: iStock

BT spun off its BT Cellnet mobile network in 2002. It was rebranded as O2 and was later acquired by Telefonica in 2005 for almost £18 billion.

Telefonica said of the discussions: "Although Telefonica is in talks with British Telecom, these talks are in a highly preliminary phase and there is no certainty that a transaction will take place." Telefonica is in the process of selling off assets in an attempt to cut its high debts.

BT also admits it has been approached by another UK mobile network about buying its small but growing UK mobile business, which is currently targeted at the business market. EE is reportedly in the frame for this purchase.

BT signalled its intention to do a u-turn from the BT Cellnet exit by buying 4G radio spectrum worth £190 million in the Ofcom auction last year. It previously said (http://www.computerworlduk.com/news/mobile-wireless/3516183/bt-may-start-4g-price-war-with-new-bundled-mobile-service/?intcmp=in_article;related) it planned to use this spectrum combined with piggy-backing on EE's 4G network.

BT said customers with BT broadband packages signing up for a 4G mobile service would also be able to access BT's extensive network of public WiFi hotspots with their smartphone.

But buying the whole O2 network from Telefonica would give BT an instant and more sizeable chunk of the mobile market, which it could strategically combine with its WiFi hotspots to widen mobile coverage even further for customers.

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