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BT mulls deal with O2 and EE to create new giant

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A pedestrian walks past a billboard advertising BT Sport

A pedestrian walks past a billboard advertising BT Sport

Simon Dawson/Bloomberg

A pedestrian walks past a billboard advertising BT Sport

Britain's BT Group has been approached by O2 owner Telefonica and the parents of O2's bigger rival EE to discuss competing multibillion-pound deals to create a powerhouse in fixed-line broadband, mobile and TV.

The former monopoly's long-mooted expansion into mobile expected next year appears to be acting as a catalyst to consolidation in Britain, where the market is split between four mobile networks and four major broadband providers.

Operators are starting to jockey for position as consumers increasingly favour buying fixed and mobile services as a package from a single provider, making existence as a mobile-only operator more difficult.

One sector banker said BT had already signalled its intention to be a leader in market consolidation. "BT has played its hand brilliantly so far," he said.

"They've held out the threat of entering in the mobile market and engineered a situation to bring EE and Telefonica to the negotiating table.

"Now BT will play them off each other since neither wants to be left without a partner in broadband."

Spain's Telefonica and EE's owners, France's Orange and Deutsche Telekom, said last week that their strategies in the UK depend in part on how aggressively BT went into mobile and whether consumers show more interest in bundled deals.

Irish Independent