BT to name preferred mobile operator for £10-bn acqusition

Mobile operators EE and O2 would learn the outcome from takeover negotiations with British Telecom (BT), City AM reported.

A report in The Sunday Times, said BT had been finalising a deal with one of the two operators over the weekend, and would announce its preferred target for a takeover worth around £10 billion early next week, the report said.

The recent weeks had seen an intensification of the battle for BT amid reports that both EE and 02 would accept a diluted offer including shares in BT as part of the takeover (See: After O2, BT in talks to buy mobile phone operator EE).

On Thursday, Cesar Alierta, chairman of 02's Spanish owner Telefonica, flew into London in a bid to hammer out a deal.

A deal with O2 would see the operator return to its original owner. In 2001, BT sold of its mobile operations arm - then called MMO2 .

With the addition of mobile to the list of services, BT would be able to offer a ''quadruple play'' package to customers - landline, mobile, broadband and TV in one.

According to James Barford, head of telecoms research at Enders Analysis, who spoke to City AM, ''Quadruple play'' packages had been a success in Europe but the same consumer demand may not be present in the UK.

BT may announce its decision as soon as today whether it would buy O2 or EE in a £10 billion acquisition.

Meanwhile, The Independent reported that BT shareholders had welcomed a possible deal that would give the company scale as it competed in quad play - broadband, home phone, TV and mobile.

According to the reports, rivals Vodafone, Sky and Virgin were expected to urge regulators to challenge any deal.