BUZZ-Telefonica: telecoms M&A hotting up

** Telefonica hits 1.5 mth highs after LiKa-shing's Hutchison Whampoa Ltd agrees to buy co'sBritish mobile unit O2

** Move will dramatically change mobile market in Britain,where Hutchison already operates the Three network - buyingsecond-ranked O2 will make it the country's top mobile operator

** Market in Britain split between four mobile networkoperators & four separately owned fixed-line & broadbandproviders

** Deal will attract scrutiny from competition authorities,but European regulators have allowed the number of telecomsoperators in other countries to shrink from four to threethrough M&A

** Less mobile cos will translate into a rise in prices - abenefit to other operators; shares in Vodafone climbalmost 3 pct on Friday

** In December, former state monopoly BT enteredexclusive talks with the owners of EE, Britain's biggest mobileoperator, with BT preferring EE over O2 (RM: tricia.wright1.thomsonreuters.com@reuters.net)