Finland's Nokia announced on Tuesday it was in advanced talks to purchase all of its Franco-American rival Alcatel-Lucent.
"Nokia and Alcatel-Lucent confirm that they are in advanced discussions with respect to a potential full merger, which would take the form of a public exchange offer by Nokia for Alcatel-Lucent," said a statement.
"There can be no certainty at this stage that these discussions will result in any agreement or transaction," it added.
The announcement came a day after reports that Nokia was in talks to acquire Alcatel-Lucent's wireless infrastructure.
Rumours have swirled since December of a possible deal between the two firms, with France's Les Echos reporting on Monday that executives had been in negotiations since January.
The purchase would represent a significant boost in market share for Nokia. The Alcatel-Lucent wireless infrastructure unit alone accounted for 36 percent of total sales for the Paris-based company in 2014, according to Bloomberg, generating 4.7 billion euros ($5 billion) in revenue.
The deal would help Nokia bolster its mobile infrastructure business against Swedish arch-rival Ericsson, profiting from Alcatel's position as a leading supplier of 4G and LTE mobile networks and related services.