Vodafone is to combine its mobile network in the Netherlands with Liberty Global’s Ziggo broadband operations.
The multinational telecommunications company is to pay Liberty £770 million to ‘equalise ownership’ in the joint venture.
Liberty, owner of Virgin Media, was previously reported to be considering a global merger, but that proved to be wide of the mark after the agreement was limited to the Dutch market.
"We will see whether there will be other developments in other countries, be it with Liberty or with others," said Vittorio Colao, Vodafone chief executive.
"We're very happy with this solution in the Netherlands, it puts us in a clear leadership position."
Vodafone Netherlands has said that will merge its five million mobile customers with Ziggo, which has around nine million customers.
The pair have estimated cost and revenue totals of £2.7 billion when the deal completes at the end of 2016, as well as £270 million in integration costs.
Mike Fries (pictured), chief executive of Liberty Global, said, "Throughout Europe, Liberty is capitalising on the rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity.
"This powerful combination of the best fixed and mobile networks in the Netherlands will deliver huge benefits to Dutch consumers and businesses."