BT is weighing up a bid to bring its former mobile phone division O2 back-in house 13 years after spinning off the business.
The telecoms giant is in early stage talks to buy the firm, or its rival EE, as it forges ahead with plans to re-enter the mobile market.
BT said it had been approached by the owners of two networks over a deal. O2 is owned by Telefonica while EE is held by Orange and Deutsche Telekom.
Reports have suggested either business could be valued at around £10 billion while it has also been suggested that Telefonica could be given a 20% stake in BT in any deal - a portion worth around £6 billion. BT did not comment.
O2, formerly known as BT Cellnet, had been spun off from BT in 2001 before being bought by Spain's Telefonica for £17.7 billion in 2005.
BT today responded to reports in Spain about a possible deal in a statement which named O2 but not the other operator potentially in its sights, which is understood to be EE.
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.
"All discussions are at a highly preliminary stage and there can be no certainty that any transaction will occur.
"A further announcement will be made if and when appropriate."
Investors cheered the announcement, with shares rising 3%.
In July, BT took its first big step back into the mobile phone market as it launched a new business service aimed at delivering fixed line and mobile calls to the same handset.
It is already planning to launch a mobile phone business for the wider public by the end of the current financial year to the end of March.
The latest move comes as BT is also engaged in a TV football war with Sky, as it tries to lure broadband customers with free Premier League broadcasts. It has also bought Champions League rights.
However latest quarterly results for the second quarter to the end of September showed it had been squeezed by rivals' promotions in the cut-throat battle for broadband customers as it reported the lowest level of customer growth for two years.
Telecoms operators are increasingly focused on moving into "quad play" - bundling together landline, mobile, internet and TV services for customers.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said it was a sector "ripe for consolidation".
But he added: "I think there would be some kind of irony that they would effectively be buying back a business that they previously had."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article