Virgin Media O2 and TalkTalk Group have resumed takeover talks.
Executives at the two companies have held discussions, The Telegraph reports.
Virgin Media O2 previously walked away from talks with TalkTalk thought to be worth £3 billion ($3.79bn) in 2022, as market and regulatory uncertainties forced a rethink on a potential deal.
However, a deal on a smaller level is thought to be a real prospect now, as struggling TalkTalk revealed in September it will split into three standalone companies.
One of those standalone units is its consumer division, which Virgin Media O2 is interested in.
The company's consumer division currently serves around 2.4 million customers. In December, TalkTalk agreed to a deal to acquire nearly half a million broadband customers from Octopus Energy.
Founded in 2003 as a subsidiary of mobile phone retailer Carphone Warehouse, TalkTalk founder Charles Dunstone spun off the firm to become an independent company in 2010.
The company serves more than four million customers in the UK and is understood to have been up for sale in the last couple of years, as it battles against a debt of around £1 billion ($1.26bn).
TalkTalk sold off its SME and enterprise-focused connectivity unit to its own shareholders for £95 million ($120m).