The German telecoms firm will pay the Anglo-American partners £6.9bn in cash for 100% of the equity in One 2 One and assume about £1.5bn in debt.

Cable & Wireless is to use its share of the sale proceeds to cut borrowings and help fund its huge capital expenditure programme.

Deutsche Telekom said that after the acquisition of One 2 One it would have 12m mobile phone subscribers in Europe.

The transaction is expected to be completed by the end of September, but is subject to clearance by the European Union regulatory authorities.

Keen interest

At least three other European telecoms groups had been vying with Deutsche Telekom to buy One 2 One.

There was interest from Mannesmann Telekom - also from Germany - from Telecom Italia Mobile and a joint French bid from France Telecom and Vivendi.

Although the smallest of the four UK mobile operators, One 2 One has been widely coveted for its strong brand and presence in the booming British mobile phone sector.

The sale comes as part of the consolidation sweeping through the global telecoms market.