Indian communications company Tata has pulled out of the running for Cable & Wireless Worldwide (CWW), leaving Vodafone as the sole contender.
The two giants had been expected to each make a takeover bid for CWW, which provides high-speed telecoms services to the police and companies including Tesco.
But Tata this week said it was unable to settle on a price with CWW.
The news will no doubt be welcomed by Vodafone, for whom CWW is an attractive opportunity. The mobile phone firm is looking to bolster its corporate credentials amid slow consumer growth.
But CWW warned: "There can be no certainty that any offer will be made, nor as to the terms of any offer."
Vodafone must now make an offer for CWW by 5pm today.
Takeover speculation has seen the CWW share price more than double since the start of this year.
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