Personal Hotspot (iPhone 4) disabled by previous GSM operator

My current operator allows and has included in my plan cellular internet tethering. (I had used their services on this device before as well). I have switched to another service provider (O2 - UK) at some point, and they have somehow disabled my personal hotspot option via a "Network Settings" message they have sent when I first switched over. Now I am back with my old GSM operator, but their support center does not know how to re-enable the option on my phone. The "Set Up Personal Hotspot" button in the "Cellular" tab is grayed out and cannot be used right now. I am already on 6.0.1 and cannot update the iOS. Tried resetting the Network settings several times - it does not work. I really do not want to revert back to factory settings - lots of things to lose.. I just thought I'd also ask here as well. (By the way I can insert my SIM to other devices and they can tether the internet, so the trouble is really in the device)

I would appreciate any help.

Thanks.