Energis and Cable & Wireless (C&W) have refused to rubbish weekend press reports that the UK telcos are locked in talks about a possible merger.

According to the Sunday Times, the pair have already hired financial advisors to negotiate the £700m deal.

Talks are said to be at an early stage but a merger, should it go ahead, would make a sizeable rival to the UK's dominant telco BT with UK revenues of around £2.3bn.

Asked to confirm or deny whether Energis was holding talks a spokeswoman for the telco told us: "We have nothing to say."

A spokesman for C&W also declined the opportunity to rule out the report as mere "rumour and speculation" opting for "no comment" instead.

This isn't the first time the telcos have been linked as possible merger material.

Just four weeks ago the pair were said to be holding behind-the-scenes talks that could lead to the eventual merger of the two UK telcos. These talks were also "at an early stage".

However, a tie-up does makes sense. Through its acquisition last year of local loop unbundling (LLU) ISP Bulldog, C&W is well poised to attack BT's established retail market by providing voice and broadband services direct to customers. That is, of course, if Bulldog can sort out its customer service issues.

Bringing Energis on board would also give C&W a number of blue chip corporate clients including the BBC, IBM and Tesco.

Last month France Telecom was linked with a possible acquisition of C&W, although this was denied almost immediately by the French incumbent. ®

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