Vodafone today confirmed it's in early stage discussions with Liberty Global over a possible asset swap, although it quashed speculation surrounding a potential a merger between the two telecoms giants.
The announcement followed media reports that the British telecoms giant had entered into informal talks with the US cable giant. Vodafone's share price fell 2.2 per cent to 242.8 pence per share in this morning on the news.
There's long been chatter over a possible deal between Vodafone, the world's second-biggest mobile operator, and Liberty Global, Europe's largest cable operator.
A tie-up has become increasingly attractive given the market is moving towards the combination of mobile services with fixed-line broadband.
Augustin Eden, research analyst at Accendo Markets, said he expects to hear more from Vodafone and Liberty global in the future:
One has to wonder whether this is somewhat of a warm-up act for a heightened display of affection between the UK (world’s second largest) mobile operator and Europe’s biggest cable company.
A sure-fire way to offer ‘all in one’ services effectively is to have everything in one place, but we wouldn’t want to unsettle the markets with a shock announcement now, would we?
Last month Liberty Global's chief executive, John Malone, alluded to the possibility of a deal with Vodafone, saying it could create significant value for shareholders.
"We've looked at that from our side and there would be very substantial synergies if we could find a way to work together or combine the companies with respect to western Europe," he said.
"Is there a great fit in Germany? Absolutely. Is there a great fit in the UK? Absolutely. Is there a great fit in Holland? Absolutely. There's the promise of creating enormous shareholder value if we could work it out."