Vodafone is in talks with Tesco to acquire its streaming video service Blinkbox, in an effort to expand the company's quad-play offering while BT eyes a takeover deal with EE, O2 and Three.
The streaming video service has not been a successful venture for Tesco, reporting a loss of £18.5m for the unit in its 2013 accounts. It recently closed its Clubcard TV service, powered by the same video streaming technology, citing lack of interest.
The retail giant has been in talks with numerous parties about selling the video service, with Mobile News suggesting that Vodafone is the sole remaining contender after other parties dropped out of negotiations.
Tesco CEO David Lewis has already claimed that if a new owner can't be found, the service will simply be closed down, branding it a "distraction", and meaning that Vodafone are unlikely to be held to a high price should they acquire the unit.
Vodafone announced plans last month to re-enter the consumer broadband market early next year thanks to its acquisition of Cable and Wireless in 2012.