December 11, 2014 / 4:14 PM / 3 years ago

Exclusive: Telefonica boss heads to London as BT mobile talks heat up

The BT communication tower is seen from The View gallery at the Shard, western Europe's tallest building, in London January 28, 2014.Suzanne Plunkett

LONDON/MADRID (Reuters) - The battle to become the mobile partner of BT intensified on Thursday as the chairman of O2-owner Telefonica flew to London and the owners of EE indicated they were willing to offer more attractive terms to seal a rival deal.

BT has been in talks with Telefonica and EE's owners, Orange and Deutsche Telekom since November about a deal to buy one of the mobile operators, putting the British telecom firm in an unusually strong position to negotiate a deal.

People familiar with the situation had told Reuters that Telefonica was willing to agree a deal which included taking shares in BT. And separate sources familiar with the situation said on Thursday that Orange and Deutsche were now also willing to accept BT stock to try to facilitate a deal.

Three sources with direct knowledge of the matter said BT was expected to choose between the two firms by early next week, with an announcement possibly coming earlier than that. Telefonica's Chairman Cesar Alierta was flying to London on Thursday afternoon to help lobby for his side.

"BT is not expected to take much longer to choose between the two," one source said. "You can reasonably expect an announcement to be made by early next week, maybe as soon as this Friday."

Part of the issue the BT board has to weigh up is whether it would rather have Spain's Telefonica, or France's Orange and Germany's Deutsche Telekom on its shareholder register.

In a sign of the heightened state of activity in the telecoms sector, Hutchison's 3 Group is expected to shortly line up a bid for whichever mobile group missed out on a deal with BT, two other sources said.

BT, Telefonica, Orange and Deutsche Telekom all declined to comment.

Reporting by Julien Toyer and Robert Hetz in Madrid, Sophie Sassard and Kate Holton in London, Leila Abboud in Paris and Harro Ten wolde in Frankfurt, Editing by Keith Weir

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