According to a report in the Sunday Telegraph, a bid is expected in response to plans by Orange to offer free broadband to its mobile customers through Wanadoo, which is a France Telecom-owned company.
The plan by Orange and Vodafone has been prompted by the Carphone Warehouse, which turned up pressure on rivals earlier this month with the offer of free broadband via its TalkTalk telecoms business.
Vodafone is playing down talk of a bid for Tiscali, which is listed on the Italian stock market in Milan, saying reports of a bid are "pure speculation".
However, with mergers such as NTL and Virgin Mobile and rivals being able to offer a package of services, Vodafone's pure play offering of mobile only is seen by analysts as wanting.
A bid for Tiscali would allow it to cheaply offer its customers broadband access. Tiscali has invested millions of pounds in local loop unbundling, which means it and others have put their own equipment into BT exchanges in order to supply services direct to consumers.
Another potential bid target is Bulldog, which is owned by Cable & Wireless.
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