LONDON (Reuters) - The board of BT (>> BT Group plc) was meeting on Tuesday and will discuss the possible acquisition of British mobile operators O2 or EE, a person familiar with the situation said.

The BT board meeting was a regularly scheduled one, said the source, and had not been especially convened to discuss the takeover options.

BT has been in talks with O2's owner Telefonica (>> Telefonica SA) and with the parent firms of Britain's largest mobile carrier EE, France's Orange (>> ORANGE SA) and Germany's Deutsche Telekom  (>> Deutsche Telekom AG).

The move would turn BT into a powerhouse not only in fixed-line broadband, but also mobile, at a possible cost of between 9 billion pounds and 11 billion pounds.

BT's choice to buy Britain's number one or two mobile operators will come down to whether it wants to stretch to buy EE, a higher quality, larger company, or take the lower risk, simpler option presented by 02, people close to the situation earlier told Reuters.

At issue is not only the price the seller wants but also the structure, with regard to cash or shares or even asset swaps, and whether BT would undertake a rights issue, the people said.

One person involved in the talks said BT buying O2 was the more likely deal since it was smaller and easier to negotiate since there was only one seller and not two as for EE. Telefonica is also eager to sell because it needs to cut debt.

BT, Telefonica, Orange and Deutsche Telekom declined to comment.

Orange boss Stephane Richard said last week that he expected BT to make its decision before Christmas but another person familiar with the talks said a decision could come this week.

BT's foray into mobile is expected to tilt the UK telecoms market towards all-inclusive bundles of fixed and mobile calling, broadband and TV, now common elsewhere in Europe.

Shares in the group have risen 9 percent since the talks were revealed on Nov. 24 and BT was given a further boost on Monday when Woodford Investment Management, run by 'star' manager Neil Woodford, said it was incredibly supportive of a mobile deal.

The manoeuvring has galvanised mobile rivals such as Vodafone (>> Vodafone Group plc) and Hutchison Whampoa's (>> Hutchison Whampoa Limited) Three into actively looking for deals or partnerships.

(Reporting by Kate Holton and Freya Berry; writing by Leila Abboud; Editing by Jason Neely, Keith Weir and Louise Heavens)