The Australian newspaper is today reporting that TPG Telecom Ltd (ASX: TPM) is interested in a full takeover of New Zealand’s largest mobile phone operator Vodafone New Zealand.

The telecommunications and internet services sector has been consolidating recently in a Darwinian fight between mid-sized operators looking to grab market share by muscling others out of the market via scale and cost competitiveness.

As a lead player in this battle, TPG Telecom recently sold around $10 million worth of stock in rival fibre-optic internet infrastructure business Vocus Communications Limited (ASX: VOC), after unsuccessfully trying to block its merger with WA-based dark fibre and data centre business Amcom.

A recent merger between Vocus and retail broadband retailer M2 Group may also be increasing the heat on TPG Telecom to accelerate its move into the mobile market in order to diversify away from the increasingly competitive fixed-line broadband market that has been the backbone of its growth.

TPG Telecom already has commercial agreements with Vodafone Australia in place worth more than $1 billion to migrate TPG’s mobile customer base to the Vodafone network and for Vodafone to use TPG’s dark fibre network to provide internet services. Under the terms of the deal, TPG will also get the funds to invest in further fibre network expansion.

However, the opportunity to grow into the lucrative mobile market via a partnership or takeover deal for Vodafone’s entire mobile businesses in Australia or New Zealand likely looks extremely attractive to TPG, which is a business that is already transferring its own mobile subscribers from the Optus to Vodafone network.

Any takeover of Vodafone Australia’s business interests would require a big capital raising and more bank debt for a company’s balance sheet that was recently leveraged to the tune of around 2.2x net debt / EBITDA after the acquisition of broadband provider iiNet.

TPG Telecom shares today sell for around $10.20 and investors would either pass them over as too expensive, or an interesting opportunity for a company that appears to be eyeing mobile as its next big growth opportunity. This in an effort to ultimately challenge less nimble, but still dominant mobile operator Telstra Corporation Ltd (ASX: TLS).

BRAND NEW! Our Top Dividend Stock for 2016

Our resident dividend expert names his Top Dividend Share for 2016. Not only are the shares dirt cheap, the company is trading on a 5.6% fully franked dividend yield. Simply click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required!

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor Tom Richardson owns shares of Vocus Communications Limited.

You can find Tom on Twitter @tommyr345

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.