In a statement to the Australian Stock Exchange, Vodafone's parent company, Hutchison Telecoms, noted that TPG Telecom had confirmed that it had engaged in exploratory discussions with Vodafone Hutchison Australia.
"The company has a 50% interest in VHA, and is aware that TPG and VHA have been in discussions regarding a potential merger," it said.
"The company notes that there is no certainty that any transaction will eventuate or what the terms of a transaction would be."
In April last year, TPG paid over the top for two lots of 10MHz in the 700MHz spectrum auction, forking out $1.2 billion, and said it planned to roll out a $600 million mobile network.
And in May this year, the company announced that it would a free, unlimited mobile data plan on its first mobile services in the third quarter of 2018.
The entry of a fourth big player into the local mobile market has not been welcome news to incumbents like Telstra and Optus, both of whom have seen their earnings hit by the rollout of the NBN.
Any merger between TPG and Vodafone would make life easier for both Telstra and Optus.