Hutchison Whampoa, one of the flagship companies of the Hong Kong billionaire Li Ka-shing, said on Friday it has agreed to enter exclusive talks to buy O2, the British cellphone carrier owned by the Spanish telecom giant Telefónica, in a deal worth roughly $15 billion.
The deal between Three, Hutchison Whampoa’s British cellphone business, and O2 would be the latest in a transformation of Europe’s telecom sector, as traditional carriers and cable operators jockey for position across the European Union.
The region’s telecom companies are looking to combine their fixed-line, mobile and cable operations to offer customers so-called bundled deals as people increasingly use their mobile devices to stream online content.
The companies also want to take advantage of coming regulatory changes that are expected to allow greater consolidation of European telecom businesses.
Under the terms of the proposed deal, Hutchison would pay 9.25 billion pounds, or $14 billion, in cash for O2. A further payment of up to 1 billion pounds would be made at a later date, depending on the performance of the combined businesses of Three and O2.
The exclusive talks between Three and O2, however, do not guarantee that a deal will be completed.
“Such negotiations may or may not result in any transaction,” Hutchison said in an announcement on Friday to the Hong Kong stock exchange. The deal would also be subject to achieving shareholder and regulatory approvals.
The potential deal follows the announcement last month by BT, Britain’s former telecom monopoly, that it was in discussions to buy EE, the British mobile phone business of Orange of France and Deutsche Telekom of Germany, for about $19 billion. BT also had held discussions with O2 about a potential sale, but opted eventually for EE.
An O2-Three deal would create Britain’s largest carrier based on the number of subscribers and would make EE No. 2 and Vodafone No. 3.
Telefónica has been looking at options for its British business, as many of its rivals, including Vodafone and the pan-European cable provider Liberty Global, have aggressively expanded their offerings.
That includes mobile competitors moving into the broadband and pay-TV markets to attract customers and cable companies adding cellphone deals to their Internet packages.
Telefónica also has been selling unwanted assets to reduce its $51 billion of net debt, one of the highest of any European listed company. It has made a number of multibillion-dollar acquisitions in the last 18 months as it tries to increase its presence in the German and Brazilian markets.
A deal between Three and O2 would reduce the number of primary mobile operators in Britain to three networks. The country’s competition authorities have previously stated that they would prefer to have at least four carriers, so any deal would probably lead to regulatory scrutiny over how it could affect consumer choice.
Analysts have cautioned that the combination of Three and O2 may raise prices for British consumers. The companies also may have to give up some of their mobile spectrum — the government-mandated radio waves that carry phone calls and wireless data — to smaller rivals to increase domestic competition.
“This combination could materially improve the U.K. market structure,” analysts at Macquarie Group said in a research note to investors before the prospective deal was announced. “We believe this proposal is rational, if challenging to execute.”
The prospective deal also exemplifies Hutchison Whampoa’s push into Europe’s telecom market. In 2012, the Asian conglomerate acquired the European telecom company Orange Austria for roughly $1.7 billion. It bought O2 Ireland from Telefónica in 2013 for about $1 billion.
For Mr. Li, a savvy asset trader who has long ranked as Asia’s richest man, the deal would mark the latest example of him buying in Europe and selling in Asia, even as he is seeking to restructure his corporate empire.
On Tuesday, Hutchison teamed up with Mr. Li’s flagship holding company, Cheung Kong, in a bid to acquire Eversholt Rail Group. Mr. Li’s companies will pay 2.5 billion pounds, or $3.8 billion, including the assumption of debt, to buy the company, a major passenger train provider in Britain, from the private equity firm 3i Infrastructure and other investors.
Earlier this month, Cheung Kong and Hutchison announced a sweeping reorganization that would simplify Mr. Li’s ownership of both firms, creating one company for property assets and another for all of his other businesses, which include ports, energy and utility businesses in Britain, Continental Europe and Australia, and a retail chain of thousands of health and beauty shops and supermarkets across Asia.
Hutchison already draws more revenue from Europe than any other region, but Mr. Li, 86, has come under criticism in Hong Kong and mainland China for a series of deals that have seen him increasing his investments in Europe and selling or spinning out assets in Asia.
On Jan. 14, an editorial in the Global Times, a state-run Chinese newspaper, said younger entrepreneurs from mainland China might make better role models than Mr. Li, who it said “may not be suitable as a bellwether for the future.”
“Li’s investment is a drop in the ocean compared to the huge size of the Chinese economy,” the paper wrote.