Vodafone's share price rose over 1.5 per per cent following reports it had rebooted talks with Liberty Global to thrash out a deal that will shake up the British and German operations of the two telecoms giants.
Company sources told technology publication The Register that Liberty Global, which owns Virgin Media, will create a joint venture with Vodafone's UK operations. In return, the US cable firm's German operations will be sold to Vodafone.
The publication referenced the fact the fourth floor of Vodafone's Newbury headquarters had been sealed off so both parties could engage in talks.
But sources close to the FTSE 100 group told City A.M. Vodafone's UK headquarters were in Paddington and the Newbury premises do have a fourth floor.
And while chief executive Vittorio Colao had previously said a partnership would make sense, sources added no active talks were taking place.
The news comes after the pair recently completed a $3.7bn (£3bn) joint venture in the Netherlands, a structure the firms are understood to want to replicate in the UK.
Despite the confusion as to whether talks were ongoing or not, City experts said the tie-up had "strong industrial logic".
Read more: Vodafone to create 2,100 new UK jobs
Ulrich Rathe, an equity analyst at Jefferies, estimated the combination will net $14bn of savings in the UK and $6bn of savings in Germany.
In 2015 Vodafone and Liberty Global terminated talks over a broader European-wide merger that would have created a £100bn media and telco behemoth. At the time, Liberty Global's chairman John Malone said the combination would be “a great fit”.
Colao was vocal at Barcelona's Mobile World Congress in February this year over the need for consolidation in the sector. He urged European authorities to do more to give telecoms M&A the thumbs-up.
"Big deals are getting done in the US while in Europe small deals are being blocked," Colao said.
Analysts highlighted any partnership between the groups "may not be the most logical ones from a regulatory perspective".
Rathe continued: "It faces a grave regulatory threat, in the form of the long-standing opposition of the German Federal Cartel Office (FCO) to cable-cable consolidation.
"The EC has proven rather supportive of cable-mobile deals in the past and does not seem to share the FCO's concerns over cable-cable consolidation."