Vodafone says it is in advanced talks to sell its 45% stake of Verizon Wireless back to the US mobile phone service provider for 130 billion dollars (£84 billion) in cash and stock.
If it goes through, it would be the second-largest acquisition deal on record. If agreement is reached, Verizon would own its wireless business outright after buying the stake back from the British mobile phone company.
Vodafone said in a statement there was no certainty that a final deal would be reached and Verizon Communications declined to comment.
The buyout, if finalised, would be second only to Vodafone's 172 billion-dollar (£111 billion) acquisition of Mannesmann in 2000, according to research firm Dealogic. It would give Vodafone additional cash to pursue its expansion ambitions in Europe and would also give Verizon Communications the opportunity to boost its quarterly earnings, as it would no longer have to share a portion of proceeds from America's number one wireless carrier with Vodafone.
The potential deal is not expected to have much of an effect on Verizon consumers or on the company's operations. Vodafone had little influence on Verizon Wireless' day-to-day operations, and the two companies have kept out of each other's territory.
The Verizon-Vodafone partnership started in 2000, when what was then Bell Atlantic combined its East Coast wireless network with Vodafone's operations on the West Coast. Vodafone had entered the US market a year earlier by outbidding Bell Atlantic to buy AirTouch Communications of San Francisco.
Verizon has had a long-standing interest in buying out its partner, but the two companies have not agreed on a price. Analysts said Verizon wanted to pay around 100 billion dollars (£64.5 billion) for Vodafone's stake, while Vodafone has been pressing for 130 billion dollars.
Vodafone is already one of the world's largest mobile phone companies and has its sights set on dominating media services in Europe, its biggest market. The company is making a takeover bid for Germany's biggest cable operator, Kabel Deutschland.
The talks come amid a changing telecommunications landscape in the US. The wireless business has been lucrative for Verizon Communications as traditional landline services decline. But the company faces growing competition in a saturated market. Number four, T-Mobile US, for instance, is making a resurgence after shattering industry conventions, including two-year service contracts.
In the April-to-June quarter, Verizon Wireless added 941,000 devices to its contract-based plans, exceeding analyst estimates and continuing a strong run. It boosted service revenue by 8.3% from a year ago. Its closest rival, AT&T, is seeing revenue increases of around 4%. But almost all of Verizon's gains on the wireless side resulted from customers upgrading to higher-priced plans or adding more devices to their existing plans, rather than an influx of new customers.