This could be the beginning of Vodafone's break-up

Vodafone just confirmed it's in talks with Liberty Global about potentially swapping assets - and that could mean the beginning of a break-up for the £65 billion telecoms giant.

The idea of UK-based telecoms giant Vodafone merging with US TV and internet giant Liberty Global is one of the most widely tipped deals in the City.

Analysts at the big banks have written reams on why the deal makes sense and why it should be done sooner rather than later.

Vodafone this morning piped up to deny that it is looking at a full-blown merger with Liberty after claims last night by Bloomberg that this was the case.

But it did say that it is looking at asset swaps with Liberty, which also owns Virgin Media here in the UK. Here's Vodafone's statement:

Vodafone confirms that it is in the early stages of discussions with Liberty Global regarding a possible exchange of selected assets between the two companies.

There is no certainty that any transaction will be agreed, nor is there certainty with respect to which assets will ultimately be involved.

That's big. Liberty boss John Malone last month said he was interested in a quasi-merger with Vodafone but only if it spun-off its businesses outside Western Europe in places like India and Turkey. That gives us a clue as to the type of thing Liberty and Vodafone might be talking about right now.

Last month in a note Nomura said there was a 50% chance of Vodafone being split up, saying: "Vodafone's CEO dismissed any notion of break-up being considered this week, but we do not believe the barriers are insurmountable."

If Vodafone and Liberty are looking at breaking up the company, the market doesn't like it. Vodafone opened up 2% this morning, one of the biggest risers on the FTSE 100, thanks to speculation a merger was in the works.

But since Vodafone's statement shares have fallen back and are now down around 0.9%.