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U.K. mobile market consolidation moves up a gear as BT eyes 02, EE

Leicester City v Manchester United - Premier LeagueLeicester City v Manchester United - Premier League
David De Gea of Manchester United dives in vain as Esteban Cambiasso (3rd L) of Leicester City scores his team's third goal from the penalty spot during the Barclays Premier League match between Leicester City and Manchester United at The King Power Stadium on September 21, 2014 in Leicester, England. Photograph by Clive Rose — Getty Images

The deck in the U.K.’s $60 billion telecoms market just got shuffled again, as BT Plc (BTGOF) confirmed it’s in talks to buy mobile network operator O2 from its Spanish parent Telefonica SA (TEFOF).

BT, which dominates the fixed-line telecoms business in Britain, has been looking to rebuild its its presence in the mobile market as the industry’s big players concentrate on developing so-called “quad play” offerings that cover both fixed and mobile telephony, along with broadband internet and television.

Vodafone Plc (VOD), the country’s largest mobile network operator, said last month that it was looking to launch its own TV and broadband services. That’s partly a response to the way that BT has muscled in on the TV market–not least by breaking BritishSkyBroadcasting Plc’s effective monopoly on English Premiership soccer matches.

For Telefonica, meanwhile, a sale would strengthen its balance sheet after a major reshuffle of its own portfolio which has seen it place major bets in Brazil and Germany.

BT said in a statement to the London Stock Exchange that it has “received expressions of interest from shareholders in two U.K. mobile network operators, one of which is O2.”

It added that “all discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.”

The other group believed to be in contact with BT is EE, which is co-owned by France’s Orange SA (ORAN) and Germany’s Deutsche Telekom AG (DTEGF), and which operates the U.K.’s first 4G mobile network. Neither of EE’s parents has signalled any appetite for developing a ‘quad play’ offering in the U.K. and are perceived as potentially willing sellers.