Spanish operator Telefonica, S.A. is working with Goldman Sachs International and Citigroup, on an offer to purchase 100% of British mobile operators O2.

The total cost of this operation is about GBP 17.7 billion (US$31 billion).

According to information distributed by Telefonica, the O2 board will unanimously recommend the shareholders accept the offer.

Telefonica has 145 million customers, including 90 million mobile subscribers, with operations in Europe and a dominant role in Latin American markets, including Brazil, Chile, and Argentina.

By buying O2 Telefonica will move into the fourth position in the mobile operator rankings, behind Orange (France), Vodafone (UK) and T-Mobile (Germany).

O2 is a spin off from British Telecom. It counts 15 million customers in all markets it operators, which include the UK, Germany and some operations in the Asia-Pacific. Last year the company reported revenues of GBP 6.7billion and made a profit before interest, tax, depreciation and amortisation of GBP 1.8 billion.