O2's £59m media account in the UK is included in the multi-market review along with Germany, the Czech Republic, Ireland and Slovakia.
O2's UK media planning and buying has been handled by ZenithOptimedia since 2004. The company’s European media business is held by a variety of agencies.
The review, which involves all of O2's incumbent agencies across Europe, takes place in May and will be led out of Madrid.
Telefónica will ask media agencies to prepare a single bid to handle all the company’s advertising in Europe.
The company said in a statement that the winning agency will need to demonstrate a "clear ability to work consistently across the region, planning and coordinating advertising activities while optimising available budget".
O2's UK marketing director, Sally Cowdry said: "We have a long history of media innovation and many industry firsts, including the first use of contextual advertising during our O2 Money campaign and the first ever interactive 3D cinema game.
"This pitch process will ensure we continue to work with the best as well as delivering important synergies and consistency through consolidation of media buying across our European businesses."
According to Nielsen, O2 spent £59m on UK media in 2009, including £22m on press and £12.1m on TV. It is also the UK's biggest spender on digital media, committing £15.2m to online.