Virgin Media O2 is reportedly eyeing up a takeover bid for full fiber provider CityFibre.

According to The Telegraph, the two companies are locked in talks for a deal potentially worth up to £3 billion ($3.66bn).

CityFibre was only founded in 2011 but has since become of the UK's biggest alternative network (alt-net) broadband providers, with its current fiber footprint extending to over two million homes.

By 2025, the company is targeting eight million premises with its Fiber-to-the-Premises (FTTP) services.

The Telegraph notes that Mike Fries, chief executive of Virgin Media O2 parent company Liberty Global, and Cityfibre boss Greg Mesch have held discussions.

A potential deal could make sense as around 50 percent of CityFibre's network overlaps with Virgin Media O2's.

Goldman Sachs-backed CityFibre secured a £4.9 billion ($6bn) debt financing package last summer to support its full fiber rollout across the UK.

However, the company recently revealed it is cutting 400 jobs, after it lost almost £50 million ($61m) in 2021, although CityFibre told DCD that 200 new job roles will also be created, meaning that the net job loss is 200.

Last month, Virgin Media O2 was linked to a £100m ($122m) takeover of another alt-net fiber broadband company, Trooli.