Should the O2-Three merger eventually get the green light, the UK mobile market could see a new operator enter the space, in the shape of French telecoms group Iliad.
French telecoms billionaire Xavier Niel, who owns the Paris-based firm, has sounded out UK telecoms regulator, Ofcom, about entering the fiercely competitive market, according to an unnamed source quoted by the Financial Times.
While Iliad refused to comment on the possibility of making a play for telecoms infrastructure in the UK, people familiar with the situation told the FT that the French operator is keeping a close watch on the £10.5 billion merger of O2 and Three.
With antitrust authorities in Brussels expected to force the combined company to sell or open its network to rivals, Iliad is said to be keen to acquire some of that infrastructure and emerge as the UK mobile market's fourth operator.
The FT suggests that news of Niel's interest in the British market will alarm rivals, with Iliad having built a reputation for offering its services at low prices to customers in France.
Upon its launch four years ago, Free, Iliad's mobile offering in France, caused an intense price war that resulted in the existing three operators in the market seeing their profits cut significantly. In an attempt to reverse the effects of the low-cost rival, Orange has opened talks to acquire Bouygues Telecom.
That deal bears similarities to Three's proposed purchase of O2. However, with the move meaning the number of competitors in the market would be reduced from four to three, the European competition regulator is expected to raise strong objections to the deal.