It has been revealed that BT is in talks with both EE and O2 regarding a potential purchase; however, there may be competition from the Hong Kong-based owner of 3.

Hutchison Whampoa is the owner of the 3 Group and is apparently preparing a bid that could scupper BT’s plans. The company is thought to be preparing a bid for either EE or O2, which could be on the table by the end of the year. BT is expected to make a final decision on a deal with one of the companies within the next few weeks; meanwhile, Hutchison is preparing a deal with the help of advisors and has yet to comment on these stories.

It is known that BT is keen to purchase a mobile business and has been in talks with both EE and O2 in recent months. EE, which is currently owned by Deutsche Telekom and Orange, has confirmed that they are in talks to sell their British mobile business to BT as one of a range of options currently available. O2 currently has the second largest share of the mobile market in the UK behind EE, with around 22 million subscribers.

BT’s decision will depend upon whether it wants the larger EE or the simpler route provided by O2. It is thought that Hutchison is keen to make a deal with EE because it is a high-quality asset and because there is already a certain amount of co-operation in the UK between the two, with a network sharing agreement already in place; however, it is also thought that there may be a tough negotiation on price with Hutchison, which has a reputation for tough deals.

O2 owner Telefonica may prefer to sell its UK business to BT, as this could be a very quick and clean deal. There has already been a competition review in Ireland after the sale of the country’s O2 business to Hutchison. Spanish-based Telefonica could probably be persuaded to sell the UK O2 business to Hutchison if BT chooses to go with EE, as it is known that Telefonica needs to sell to repay debt.

EE is currently valued at £11bn, while O2 is estimated to be worth around £9.4bn. It is thought that Hutchison might be keen to go for the cheaper option, but it is not known which way BT is leaning. The 3 Group now has business operation in the UK, Ireland, Sweden, Austria, Denmark and Italy.

O2 was previously part of the BT group and was demerged after the stock flotation that took place in 2001; Telefonica became the owner in 2006. BT is looking for a return to the mobile market to strengthen its position as a leading telecoms provider in the UK. Many providers are now offering a range of services, including fixed line, mobile broadband and TV packages.