Mobile phone operator Eircell is to buy the Person To Person (P2P) chain of shops for a figure in excess of £10 million. Meanwhile, it has emerged that its rival Esat Digifone has withdrawn its dealership from Lets Talk Phones, another chain of mobile retailers.

Mr Tony Boyle, managing director of Sigma Wireless which owns P2P, said no deal had been done and the company was talking to "multiple parties".

However, it is understood that the deal will be concluded shortly.

Eircell chief executive Mr Stephen Brewer confirmed he was talking to P2P and other retailers. "I would love to buy P2P," he said.

Buying retail outlets makes sense for mobile operators. They pay retailers a huge "bounty" to encourage them to get customers on to their networks. By owning the shops themselves they save on the bounty and increase their visibility on the market.

P2P is in all major Irish cities, including Dublin, Cork and Galway and has a strong presence in shopping centres such as Jervis Centre, Blanchardstown and The Square in Tallaght.

At present it has around 20 outlets and is well-respected within the business.

Mr Boyle said P2P was the top selling retailer for Eircell and second largest for the Digifone network - after Cellular World.

An intense battle is currently underway among the mobile operators to win the hearts and minds of customers, ahead of the entry of a third operator. Both are vying strongly for a high street presence.

Eircell is also about to sign a deal to buy Lets Talk Phones and Digifone's decision to effectively cut off Lets Talk Phones is further evidence of the retailing wars.

As reported in The Irish Times in August, this acquisition would give Eircell 15 shops for a reputed £4 million. Let's Talk's managing director Mr Jonathon Stanley confirmed that Digifone was no longer dealing with his company since last week. "We are currently taking legal advice on the matter," he said.

It is understood that Digifone was extremely dissatisfied with the number of referrals it got last month from Lets Talk outlets. Digifone's chief executive Mr Barry Maloney confirmed that his company had withdrawn the dealership. "We did it because they were dissuading customers from subscribing for our service and encouraging them to go to our competitor," he said. Mr Maloney said these were serious breaches under Digifone's dealership agreement and therefore it had been decided to terminate the arrangement. "It is not a decision we took lightly," he said. Mr Stanley said Lets Talk had always been a big customer for the Digifone network and he did not understand why Digifone had taken this action. He said he had been satisfied that his outlets had been selling both networks' services equally.

Mr Stephen Brewer said he had been "shocked" at Digifone's action. Digifone has also entered the retail market directly and last month injected £2 million in the Cellular World retail chain for a controlling interest in its 24 shops. Mr Brewer said referals from Cellular World shops to the Eircell network had fallen since the Digifone deal. "I'm disappointed if they have chosen to offer customers Digifone in a more aggressive manner," he said. "They are doing it for their own reasons, to meet the particular needs of their new shareholders."

Let's Talk, which is 40 per cent owned by ICC Venture Capital, has a strong brand name and is also well-respected in the marketplace. Mr Stanley, a founder of the chain which currently has 14 outlets, said he wanted to sell both networks. He admitted that Digifone's withdrawal from his chain would impact on earnings.