Hutchison Whampoa, the multinational conglomerate that owns Three, is in talks over a $10 billion deal to purchase O2.
Rumours emerged earlier in the week that Li Ka-shing, the richest man in Asia, was looking to add O2 to his company's roster of UK mobile networks.
Now Hutchison has confirmed that the two parties have entered negotiations with current O2 owner Telefonica over a possible £10.25 billion acquisition. These negotiations will take place "over a period of several weeks."
Should the deal go through, then a merged Three and O2 would leapfrog EE (itself a combination of two networks, and also set to be acquired by BT) to become the UK's biggest mobile network.
The potential shrinking of the UK network market from four to three operators has led to doubts over regulatory approval for deal, but there are precedents.
"The European Commission has taken a positive view of four- to-three consolidations of mobile in three cases now," said Hutchison's group finance director Frank Sixt, "and we believe that the precedents that they have set in those transactions will apply for this transaction."
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Others have voiced concern over the potential price increases that customers may experience should the UK network count be lessened in this way.
As several sources have pointed out, including those of the BBC, the Austrian mobile market is one of those aforementioned precedents, having been reduced from five mobile networks to three in recent times. However, this has seen prices rise.