Ronan Dunne, CEO of O2 UK, is exploring the possibility of a debt-fuelled £8.5bn management buyout of the business following CK Hutchisons failed acquisition bid for the company which ended when the EU stepped in to block the deal.

According to The Telegraph, Dunne has been approached by private equity companies who are looking at a deal, and executives at O2 are now considering whether or not such a buyout would be financially feasible.

Given how recently the O2/Hutchison deal fell apart, talks are still in their early stages, and in fact an exclusivity contract between Hutchison and Telefonica, the owners of O2 UK, remains in place until the end of next month unless both agree to a split. However, given O2s strong cash generation for the past few years, it makes a good candidate for a leveraged buyout.

If the takeover does take place, the bid will reportedly be less than the £10.25bn offered by Hutchison, as its offer took into account potential savings that could be made through a merger of the O2 with the companys existing UK network, Three.

There were similar reports last week, suggesting that former EE and Virgin Mobile executive Tom Alexander was also looking into a privately financed takeover of O2. With O2 back on the market, Liberty Global, the owners of Virgin Media, and Sky have also both been floated as potential new bidders for the UK operator.

When the Hutchison deal collapsed, Telefonica said that it would “enter a period of reflection” on its plans for O2 UK. Given the interest that seems to be re-emerging, that period of reflection may be shorter than the company predicted.