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The Financial Times reported on Wednesday that Spanish telecoms giant Telefónica, owner of Britain's largest mobile telecoms brand, O2, is considering joining in the battle for ownership of T-Mobile, currently owned and operated by Deutsche Telekom (Xetra: 555750 - news) . The same report also claims that France Telecom (Paris: FR0000133308 - news) , owner of the UK's third largest mobile brand, Orange, is also considering throwing its hat into the ring.

This comes on the back of the FT's earlier report that Vodafone (LSE: VOD.L - news) (LSE: VOD) was about to make a takeover move, which would see it with a 40% share of Britain's mobile market, adding T-Mobile's 15% share to its own current 25%. That would take Vodafone into the top spot, overtaking O2's current 27% share. The FT suggests that this potential loss of the top spot is, in part, the reason behind Telefónica's sudden interest.

A bidding war?

So, it seems likely that a bidding war for T-Mobile is looming, though none of the parties involved has so far confirmed anything (with France Telecom going so far as to deny it has any interest). T-Mobile is estimated to have a value of around £2.5b to £3.5b.

All of this has been sparked by T-Mobile's disappointing performance under the Deutsche Telekom umbrella, with sales falling 21% in the first quarter of this year -- a result that has prompted Deutsche Telekom to appoint JP Morgan as an advisor on strategic options (which is often seen as a euphemism for "Offload this for us, will you").

It does seem likely that any deal giving a single operator such a large share of the UK market would attract the attention of the telecoms regulators. But seeing as the French, Italian, and Spanish, markets are already dominated by leading operators with more than 40% of the market, it would seem unlikely that a deal would be blocked.

More to come

Mergers and consolidations are probably pretty much inevitable in the European telecoms markets in coming years, as the EU moves closer and closer to a single market for telecoms services. With mobile telecoms becoming ever more commoditised these days and with ever less differentiation between operators' offerings (well, they all have equally impenetrable ranges of pricing plans, at the very least), the existing plethora of brands across the EU makes less and less sense.

Though having said that, the differentiating factor that has probably most accounted for O2 taking the UK's top spot is its exclusive deal for Apple (NASDAQ: AAPL - news) 's iPhone. Should Telefónica succeed in its takeover attempt, we could perhaps see the potential iPhone market stretched to more than 40% of UK subscribers.

Vittorio Colao, Vodafone's Chief Executive, did indicate an interest in the consolidation of various telecoms operators in the global market earlier this year, but the timing seems to be simultaneously good and bad for such moves.

It's a good time, because a struggling economy provides better opportunities for acquiring rivals more cheaply -- in boom times, Deutsche Telecom would be unlikely to be thinking of letting go of T-Mobile at any price. But that works both ways, and in a time when slowing European demand is forcing severe cost-cutting in the likes Vodafone, raising the necessary cash for such ventures might prove difficult.

But, one way or another, the market isn't big enough for all of them, and T-Mobile looks certain to change hands. We'll just have to wait to find out who wins the battle.