Assuming what is being reported by The Telegraph does take place on Friday the merger between O2 and Three, where Hutchinson Whampoa who run Three are paying O2 £10bn will create the largest UK mobile company at some 32 million customers.
Telefonica has been looking to sell its UK mobile operation O2 for some time, after previously divesting itself of its fixed line operations over a year ago. The sale will require approval from the EU, which is expected to happen.
This move will reduce the number of mobile network operators to three, i.e. Vodafone, Three and EE. EE is expected to be purchased by BT in the near future for around £12.5 billion which will place EE/BT in an unusual position compared to the other two of having a substantial fixed line network in addition to a mobile operation. Vodafone does own C&W which operates a backbone and LLU network, but the fixed line LLU presence is relatively small compared to Sky and TalkTalk.