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The new hardware will arrive next month, according to a "well placed insider" who spoke with MoDaCo. The new device will include a wireless radio for mobile data, but there will be no other changes to the hardware from the current Wi-Fi-only model.
The report said the new model will be a "3G" version. It did not indicate whether the rumored device will be able to connect to high-speed 4G LTE networks.
Asus is said to be ramping up production of the new device, and is on schedule to launch in about six weeks. A launch date and availability have yet to be nailed down.
A 3G version of the Nexus 7 would go beyond Amazon's current Kindle Fire, which is only available with Wi-Fi connectivity. However, Amazon is set to hold a media event on Thursday where it is expected to unveil new Kindle Fire models, which could potentially include a 3G or 4G LTE variant.
Apple has offered cellular data connectivity with its market leading iPad since the first model launched in 2010. This year's third-generation iPad was the first Apple device to include high-speed 4G LTE connectivity.
With the Wi-Fi Nexus 7 now available a 3G version rumored to be forthcoming, and Amazon apparently gearing up to debut new models, competition is heating up in the smaller tablet space. Apple is expected to throw its hat into the ring in October, when it is rumored to launch a smaller 7.85-inch iPad that will be available alongside its existing 9.7-inch model.