Orange has confirmed it is in talks to form an alliance with NTL.
The two companies are expected to announce a deal which will see Orange create a new mobile service for NTL users.
Both companies are part owned by France Telecomthat industry observers say could make them a perfect fit.
An Orange spokesman says: "We can confirm that we are in discussions with NTL with a potential deal that will benefit its customers as well."
The spokesman says there is no real time-scale for the discussions which are not being made public.
There has been speculation that the deal will involve Orange routing its calls through NTL's cable network at low rates.
In return it is believed Orange will act as a Virtual Network Operator for NTL to create a mobile phone service for NTL customers.
NTL is Britain's largest cable operator and is expected to offer large discounts to customers who buy fixed-line and mobile services from them.
If the deal goes ahead it would give Orange a potential market of 2.5 million customers for its new services. It would also be Orange's first major initiative since its flotation earlier this year.
PA
