Deutsche Telekom and Orange have confirmed they are in talks with BT over the sale of their EE operation — potentially creating one of the largest integrated fixed-mobile operators in Europe.

The German and French operators said they are having “highly preliminary exploratory discussions” and it is “too early to state whether any transaction may occur”, unsurprising since BT confirmed earlier in the week it is also in parallel negotiations with Telefonica’s O2.

BT is thought to be offering “at least €6 billion” in cash plus a 20 per cent stake in the merged entity to Telefonica.

It is not clear if Deutsche Telekom or Orange is interested in retaining a stake in the merged entity.

Either way, a combination of the UK’s largest mobile operator with its fixed-line leader would create a powerful new force in European telecoms.

However, a potential merger of BT with EE faces greater regulatory barriers than a deal with O2.

EE recently launched its own TV service and made clear its intention to compete in the quadplay market. It also owns fixed infrastructure to underpin that strategy.

In contrast, O2 has consciously stepped back from fixed services in the UK, making it a cleaner fit for BT, which is gearing up for a return to the consumer mobile market (although it has yet to launch services).