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By Bloomberg

Vodafone Group Plc said it’s in talks to exchange assets with billionaire John Malone’s Liberty Global Plc in a deal between two of Europe’s biggest wireless and cable providers.

The negotiations are in early stages and may not lead to an agreement, Newbury, England-based Vodafone said Friday. A deal involving the carriers’ European businesses is one of the options being discussed, Bloomberg News reported Thursday.

Vodafone, whose mobile-phone empire stretches from India and South Africa to the U.K., fell 1 percent to 245.75 pence at 8:43 a.m. in London after saying it’s not in talks about a full merger with Liberty Global. Liberty Global jumped as much as 6.2 percent in late U.S. trading on Thursday.

Marcus Smith, a Liberty Global spokesman, declined to comment.

Facing increasing pressure to maintain profit growth, phone companies are using acquisitions to expand while cheap financing remains available. Liberty Global is the largest cable company in the world and could diversify its products by owning wireless assets, offering what’s known as a quad-play to customers including TV, landline phone, broadband Internet and wireless service.

Consolidation Drive

European telecommunication companies have been rapidly consolidating to gain scale and offer more services amid competition that’s driving down prices and profit margins. BT Group Plc said in February it agreed to acquire EE Ltd., the U.K. mobile business co-owned by Deutsche Telekom AG and Orange SA, for $19 billion. That deal also created a company that could offer a quad-play.

The next month, Telefonica SA sold 02, its wireless carrier in the U.K., to Hong Kong-based Hutchison Whampoa Ltd. for $15.3 billion.

In an interview with Bloomberg News last month, Malone said a tie-up with Vodafone would be a “great fit” for his cable empire in western Europe, his first public comments on a long- mooted combination of the carriers. He cited the benefits of a merger in Germany, the U.K. and the Netherlands.

The possible structure of a deal between Vodafone and Liberty Global has been evolving since late last year. While buying Liberty outright was Vodafone Chief Executive Officer Vittorio Colao’s original idea, more recently his goal has shifted into acquiring that company’s western European assets, one of the people familiar with the matter said.

Malone has been busy consolidating distribution assets. His Liberty Broadband Corp. owns more than 25 percent of Charter Communications Inc., which just agreed to acquire Time Warner Cable Inc. for $55 billion.

Liberty Global bought Dutch cable provider Ziggo NV last year and U.K.-cable operator Virgin Media Inc. for $16 billion in 2013.