Vodafone has confirmed it is in talks to potentially acquire New Zealand operator TelstraClear.
The statements reveal that Vodafone approached Australian incumbent Telstra, the parent company of TelstraClear, with an offer.
A purchase of TelstraClear would give Vodafone's New Zealand arm more scope to compete with New Zealand's dominant operator, Telecom NZ.
It could give Vodafone the assets it needs to compete with Telecom NZ in the broadband market - including alternative high-speed broadband infrastructure to the Ultrafast Fibre network being rolled out by the incumbent and several utilities in a public-private partnership.
The New Zealand Heraldreported that Telecom NZ has been estimated as having a 49% share of the nation's broadband market, compared to just 16% for TelstraClear and 13% for Vodafone.
Sources told the paper that a potential sale may involve only parts of the TelstraClear business, such as the consumer rather than enterprise segment.
But commentators have speculated that New Zealand's corporate regulator Commerce Commission may probe the potential deal, as it could reduce competition in the telecom market, TVNZ said.
A merger between New Zealand's second and third largest operators would lead to an effective market duoploy. And while Telecom NZ dominates the broadband market, Vodafone captures the majority of mobile revenue.