Australian telecommunications company Telstra says it is in discussions with Vodafone about possibly selling New Zealand subsidiary TelstraClear.
The listed company says it has been approached by Vodafone to consider selling and the parties are now in discussions.
But in a statement on Tuesday Telstra stresses there is no certainty about whether an agreement will be reached.
TelstraClear made gross earnings of $69 million in the six months to the end of December 2011, compared with $62 million in the same period a year earlier.
IDC's research manager, Peter Wise, says a takeover makes sense.
TelstraClear is strong in the business sector and had a large national fibre network which Vodafone could use to backhaul its own cellular network.
There are some overlaps in local loops, but a merging of the two companies networks would give Vodafone an much bigger network, possibly putting it on an even footing against Telecom.