The plans are believed to be at an early stage and there is no certainty a deal will be finalised, according to reports from Bloomberg and the Sunday Times.
Hutchison could pay as much as £9 billion to Telefónica for the O2 unit.
Since last summer, Telefónica has been examining options for exiting the UK market to help reduce debts.
There has also been speculation since December as to whether Three will pursue its own deals after BT entered into exclusive talks to acquire Deutsche Telekom and Orange’s EE.
A deal between O2 and Hutchison Whampoa could cause regulatory concerns for UK regulator Ofcom, which has long supported having four mobile operators in the country.
Representatives from Telefónica and Hutchison have declined to comment.
