Vodafone (LON:VOD) has made the latest move in European telecoms industry consolidation by unveiling a Dutch tie-up with Liberty Global - sparking hopes that a bigger deal is coming.
The UK-based mobile phone operator unveiled a 50/50 joint venture with the US owner of Britain's Virgin Media to create the Netherlands's second-biggest player behind former state monopoly KPN.
Vodafone will combine its own Vodafone Netherlands division with Ziggo, Liberty's Dutch fixed-line and broadband arm, in a deal expected to close around the end of this year.
Given Vodafone has a market capitalisation of £55.6bn, the creation of the new £15bn mobile-and-cable operator may seem like relatively small beer for the UK company.
But seen in the light of recent industry consolidation, investors are likely to see it as a statement of intent by Vodafone to do a potentially transformational transaction.
Analysts at Credit Suisse said: "Vodafone and Liberty Global have agreed to combine their Dutch businesses to form a €19bn mobile-and-cable operator in what many investors will hope will be a precursor to a bigger deal."
Speculation has been rife in the markets about potential merger activity in telecoms as mobile operators try to enter the fixed-line and broadband market and fixed line operators seek to enter mobile.
BT (LON:BT.A) has done just that with its £12.5bn swoop for EE, which has put it back in a market that it left in 2001 when it spun off its BT Cellnet business.
Mobile operator Three, owned by Hong Kong conglomerate Hutchison Whampoa, has been attempting to persuade UK regulators to allow it to buy O2 from Spain's Telefonica.
There has even been idle speculation that Vodafone could do a deal with Sky, although that has not materialised to date.
Sky (LON:SKY) has got on with its own assault on the continent by paying £6.9bn for its European sister companies Sky Deutschland and Sky Italia in 2014.
Investors in Vodafone got excited when the UK firm announced last June that it was in the early stages of discussions with John Malone's Liberty about an asset swap between the pair.
Their hopes were dashed in September when Vodafone said the talks had ended, without saying why.
But Tuesday's announcement is at least likely to be taken as evidence of a growing relationship between the pair that could help solve Vodafone's dilemma in the UK.
Analysts have pointed out that with all the consolidation going on around it, Vodafone needs to develop a broader range of services for UK customers.
Charlie Huggins, investment analyst at Hargreaves Lansdown, said: "Vodafone is broadening services out beyond mobile and into broadband, cable TV and fixed lines, moving toward the Holy Grail of quad-play services, one market at a time.
"The obvious omission here is the UK, where Vodafone has seen its position marginalised by BT’s purchase of EE and the merger of O₂ and Three.
"It is attempting to catch up now with a mobile broadband marketing campaign and a pay TV offering due shortly."
But that hasn't stopped Vodafone pressing ahead with its own plan to create a pan-European fixed-line and broadband network.
The group took over Kabel Deutschland in Germany in 2013 and a majority stake in Hellas Online in Greece in November 2014.
It also completed the €7.2bn acquisition of Spanish cable TV operator ONO in 2014 and has done other co-operation deals with operators in Portugal, Ireland and Belgium.
Vodafone and Liberty expect the Dutch deal to to result in €3.5bn of cost, capital spending and revenue savings.
At the end of last year, Ziggo had revenue of about €2.5bn and operating cash flow of €1.35bn. Vodafone Netherlands had revenue of €1.9bn and underlying earnings of €643mln.
Vodafone chief executive Vittorio Colao said: "This transaction marks a continuation of Vodafone's market-by-market convergence strategy."
Analysts at broker Killik & Co said: "We see this as a positive move by Vodafone to strengthen its competitive position as telecoms players become unified across mobile and fixed-line."
Shares in Vodafone rose 0.25p to 209.7p in afternoon trading in London.