Swisscom is reportedly the only firm still in talks for Vodafone Italy

Three sources told Reuters that merging Swisscom's Fastweb Italian business is the sole option being looked at for Vodafone’s Italian operations, after a deal with Iliad was rejected in January.

Iliad had tabled a new offer for Vodafone Italia in December last year, having had a previous full takeover bid rejected almost two years almost two years before that .

The 50:50 joint venture plan valued Vodafone Italia at an EV of €10.45 billion and would have seen Vodafone receive €6.5 billion in cash plus a €2 billion shareholder loan, as well as affording it the opportunity to bring in yet more cash – up to €1.95 billion in total – by allowing Iliad to buy it out through a call option at a rate of 10% per year.

Iliad actually increased the cash offer to Vodafone by €100 million to €6.6 billion, while reducing its own by the same amount, and removing the call option – but the deal was till rejected. Vodafone said in a statement at the time "We are no longer in talks with Iliad, but our discussions with others continue," again according to Reuters.

Vodafone and Fastweb rank second and fourth in Italy's residential broadband market and so combined could start to challenge leader TIM. As we concluded at the time, Fastweb has little presence in mobile, so while a tie-up would not boost Vodafone's standing, it may have an easier time with the regulatory hurdles.

As such this certainly means there is sense to a merger between the two firms, but we’ll have to wait and see if anything more concrete emerges on that front. In the meantime we can probably expect a few more whispers finding their way to the business press rumour mill as the talks continue.