Ronan Dunne, CEO of O2 UK, is “exploring a debt-fuelled £8.5 billion management buyout” of the business following the failure of CK Hutchison’s bid, according to The Daily Telegraph.

The report said that Dunne has been approached by private equity companies looking at a deal, and execs are now “running the numbers” to see if it would be feasible to take it independent. O2’s strong cash generation would make it a good candidate for a leveraged buyout.

Unsurprisingly, following the recent collapse of the Hutchison deal, the talks are in their “early stages”. The report also said that an exclusivity contract remains in force between Hutchison and Telefonica (owner of O2 UK) until the end of next month, unless both agree to a split.

The Telegraph report said that the bid will be less than the £10.25 billion offered by the parent of 3 UK, because that deal also took into account potential savings through the merger of the two networks.

Reports last week suggested that former EE and Virgin Mobile exec Tom Alexander was looking at a similar offer. It is possible that Alexander and Dunne may end up on the same side.

Cable giant Liberty Global (parent of Virgin Media) also acknowledged it would be “strange” if it did not look at its options. And media company Sky may also look to get involved, although a full takeover is seen as less likely.

Telefonica said after the deal fell through it would “enter a period of reflection” on its plans for the UK unit. Other options could include an initial public offering for the unit, which would free-up funds for the Spanish company while enabling it to remain a presence in the UK market.

Earlier this year O2 UK’s Ronan Dunne told Mobile World Live that the Hutch deal was needed to create a “standalone mobile champion” in the market. Dunne’s opinion will likely change if future scenarios involve a tieup with one of the cable or media giants.