BT Wholesale has signed a 10-year deal with Telefonica UK to support the rollout of the mobile operator's 4G services.
The deal will see BT build a new high capacity transmission network to help Telefonica, which operates under the O2 brand in the UK, cope with the growing demand for mobile data services from 4G users.
According to recent figures from comms regulator Ofcom, the demand for mobile data is forecast to be 80 times higher by 2030 and will put considerable pressure on the UK's mobile networks.
The work will also boost O2's backhaul capacity, by offering high speed mobile backhaul links between mobile base stations and the new network, and will lower overall transmission costs by letting the company adopt Ethernet-based IP services.
Adrian Di Meo, chief technology officer at O2 UK, said the tie-up means the firm will be more than prepared for the predicted 400 per cent uptick in mobile data traffic demand that is expected to take the UK by storm over the next three years.
"This is a huge opportunity for us, as well as a technical challenge," he said.
"But through our partnership with BT Wholesale, customers of O2 will be backed by a high-performance mobile internet network which we believe will release the potential of 4G services and result in unrivalled mobile phone and internet browsing experiences."
Chet Patel, managing director for BT Wholesale Markets, added: "Our network solution will help O2 deliver a next generation mobile experience to customers to fully exploit the exciting possibilities of 4G technologies."
