A POTENTIAL bidding war for mobile phone operator T-Mobile was in prospect today after reports said O2 owner Telefonica was eyeing the business.

The Spanish company's interest in T-Mobile would throw down the gauntlet to mobile phone giant Vodafone, which is also weighing up a possible bid, according to reports.

Telefonica is said to be concerned that O2 would lose its market-leading position in the UK if Vodafone goes ahead with an offer.