A TAKEOVER of Smart Telecom by O2 is not imminent, according to market sources.

It had been reported that the European telecoms giant was in advanced negotiations to acquire Smart in an all cash deal and that heads of agreement could be signed within the next 10 days.

While the two parties have been in talks, it is understood that those negotiations are not at an advanced stage.

O2 and Smart declined to comment on the reports.

O2 has been linked to other smaller telecoms players in the past.

The company was understood to have been interested in telecoms company Perlico before it was acquired by Vodafone last November.

Just two years ago, Smart Telecom had been close to collapse. At the time, Brendan Murtagh, one of the two brothers behind building materials group Kingspan, held 20 per cent of Smart Telecom and rescued the business when it was floundering with a €40 million debt and losing €2.5 million a month.

Calally, a company 90 per cent-owned by him, took over the business, while Smart Telecom plc took the remaining 10 per cent.Calally has been renamed Smart Yuroe Broadband (SYB). Smart still holds 10 per cent of SYB, while Mr Murtagh owns 50 per cent.

Its other backers are John O'Riordan and Tom Jones, one of the original investors in Smart. Both men hold 20 per cent of its stock.