BT in talks to relaunch its mobile network in partnership with O2. (Credit: BT)

BT is planning a return to the mobile network market, 11 years after spinning off its BT Cellnet division to O2, in a move that would see it rival Virgin Media as a provider of mobile, landline, broadband and television.

BT chief executive Ian Livingston said in an interview with the Telegraph that within a year it is "highly possible" that SIM cards from the telecoms company will be inside consumer's smartphones once again.

"We've still got a lot more to do," Livingston added. "The moment any company stops thinking it has a lot more to do, that's when it goes wrong."

During Ofcom's recent 4G auction BT paid £186m for parts of the 800MHz and 2.6GHz spectrums, but said it had no plans to use the bandwidth for a mobile network. Instead, the company said it would use 4G to deliver mobile broadband to rural areas where installing cables for a small number of homes is too expensive.

A BT spokesperson told IBTimes UK: "We can confirm that we're exploring various options given the excellent spectrum we have and that we plan to build on our strength in Wi-Fi. We'll say more once we conclude our Invitation To Tender."

O2, through its parent company Telefonica, failed to secure any spectrum in the 2.6GHz band, instead paying £550m for two lots of 800MHz spectrum. This could lead to problems for the company in urban areas as it may not be able to deliver the bandwidth necessary for large amounts of data through the narrower spectrum.

After the auction, O2 told IBTimes UK that the price of the 2.6GHz spectrum had "gone beyond the cost of providing extra capacity by other means."

O2 suggested that it could recycle some of its older spectrum for 4G use, as EE did last year, and a possible partnership with BT would further help to broaden the network's 4G coverage. O2, Vodafone and Three are expected to launch 4G services later this year to compete with EE.

Last week, BT announced its new sports television channels, based at the London Olympic Park and offering coverage of Premier League football, Aviva Premiership rugby, UFC, MotoGP, women's tennis and extreme sports from Red Bull.

If it launches a new mobile phone network, BT would be expected to sell it alongside its TV, broadband and landline services, offering bundles of all four in a similar fashion to rival Virgin Media.