Its value is up more than 500% over the past four years yet the aggressively managed TPG Telecom Ltd (ASX: TPM) may be eyeing up its biggest deal yet in the years ahead.

The Australian Financial Review is reporting that TPG’s famously reclusive chairman David Teoh may have been in Auckland plotting a takeover bid for the entire mobile network of Vodafone Australia and New Zealand.

Around six months ago TPG announced it had agreed a $1 billon deal with Vodafone Australia to migrate its mobile customers to the Vodafone network, while Vodafone would gain use of TPG’s extensive fibre optic physical cable network.

The two companies are already close and if TPG Telecom were able to gain Vodafone Australia’s mobile network its ambitions to challenge Australia’s dominant technology business Telstra Corporation Ltd (ASX: TLS) would take a giant leap forward.

The main obstacle to any deal would be the exorbitant costs involved as TPG Telecom has a stretched balance sheet already, with bank debt of $1.46 billion and a net debt to annualised EBITDA ratio of 2.1x forecast full year EBITDA between $770 million to $775 million.

TPG’s market value is around $9.2 billion and any deal to acquire Vodafone Australia is likely to cost far north of $2 billion, which means it may be out of reach of TPG. For now.

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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.