BT confirm discussions to buy back O2

British Telecom could be about to purchase O2 from Telefonica.

UK mobile network operator O2 might soon be back in the hands of BT with current owners Telefonica looking to build an alliance with the telecommunications company.

Spanish website El Confidencial is claiming that CEO of Spain's Telefonica César Alierta is "exploring a strategic alliance with British Telecom to create a European giant."

While talks are supposedly in advanced stages there are no concrete plans in place just yet.

The report does go onto to add this alliance is in response to the increasing threat from American network giant AT&T, who apparently are looking to take advantage of the disintegration in the European telecoms sector.

El Confidencial's sources have said that the deal will involve Telefonica taking up a 20% stake in BT's company and in return they will take back control of O2, which they sold in 2005 for a staggering £18 billion.

This move, should it go through, would be a big boost to BT as they are looking to move back into the mobile network industry next year.

Rumours surrounding the future of O2 have been circulating for most of the year now but this is the clearest sign that UK mobile phone opertor's fate could be decided sooner rather than later.

Since writing this piece BT have confirmed they have interest in two mobile operators.

BT said: "We continue to develop our own plans for providing enhanced mobile services to business and consumer customers, in line with our previous announcements.

"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 UK."

"We have received expressions of interest from shareholders in two UK mobile network operators, of which one is O2, about a possible transaction in which BT would acquire their UK mobile business."