(Bloomberg) --

Vodafone Group Plc shares rose as much as 5.2%, the most in more two months, after reports that the telecommunications group is exploring mergers with its key U.K. and Italian units. 

London-listed Vodafone expressed interest late last year in acquiring CK Hutchison Holdings Ltd.’s Three UK, Bloomberg News reported on Saturday. Reuters also reported that Vodafone was in talks to merge its Italian unit with Xavier Niel’s Iliad SA. 

“Like London buses, you wait for ages and then two come along at once,” said James Ratzer at New Street Research in a note to clients. Ratzer, as well as analysts at Goldman Sachs Group Inc., welcomed the prospect of deals, and also pointed to hopes of Vodafone striking a deal in Spain.  

Vodafone Chief Executive Officer Nick Read talked up the company’s hunt to strike deals to consolidate in its “major European markets” results in November. Intense competition has weighed on the Newbury, England-based company’s returns for years but regulators seemingly stood in the way of mergers that would reduce the number of carriers in a market from four to three. 

In 2016, Three’s attempt to buy O2 in the U.K. was blocked by the European Union. However, subsequent court rulings and 2018’s merger of T-Mobile and Tele2 in the Netherlands have given the sector new hope. 

“If Vodafone is able to pull these deals off then we believe it should help to further support the stock, but a lot will hinge on the outcome of any four-to-three mobile regulatory reviews,” Ratzer said. “The Netherlands precedent is certainly helpful.”

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