The U.K. company is mulling options for its 45 per cent stake in the U.S.'s Verizon Wireless, of which Verizon Communications owns the other 55 per cent.
Analysts have suggested that Verizon wants to pay around $100 billion for Vodafone's stake, although reports have said that Vodafone is pressing for as much as $130 billion.
Vodafone's shares were trading 8.14 per cent higher at 2.05 pounds after it confirmed the talks with Verizon.
Vodafone, which has wide-ranging interests and is expanding in Europe, has long been rumoured to be interested in a U.S. exit. Talks on a sale earlier reportedly broken down over price and tax concerns.
But competition among cellphone providers and other companies moving into the cellphone space is pushing both companies toward a deal, said Ronald Klingebiel, a telecommunications specialist with Warwick Business School.
Vodafone also had no control in running its Verizon stake, which made it more of an investment than a base from which to expand into the U.S. market.
"This would be a happy moment to exit," Klingebiel said.
Meanwhile, there has been recent speculation that Verizon could enter the Canadian market with the possible purchase of at least one of the country's smaller wireless players.
In July, Verizon said it was taking a look at the Canada.
"We continue to explore and have discussions, but at this point it's really just an exploratory exercise,'' Verizon chief financial officer Francis Shammo said a the time.
The Canadian government recently eased the rules on foreign investment for wireless companies with less than 10 per cent of the marketplace, paving the way for the entry of Verizon and possibly other foreign telecom companies to set up shop and also buy small Canadian wireless companies.
Canada's big wireless carriers have launched a media campaign to warn that they would be at a disadvantage if Verizon were allowed into the market under the current set of rules.
At the same time, Vodafone is pushing ahead with a takeover bid for Germany's biggest cable operator, Kabel Deutschland, as part of its strategy to dominate media services in Europe, its biggest market.
If approved by regulators, Vodafone would gain 32.4 million mobile, five million broadband and 7.6 million direct TV customers in Germany. It has 19.2 million mobile customers in the UK, and it has been under intense competition.
Any proceeds from a Verizon Wireless sale would add to its war chest for further acquisition or allow the company to pay down debt.
But analysts have been cautious, wary of Vodafone's track record on mergers. In 2000, in what was the largest corporate merger ever, the company took over Mannesmann AG in a stock-swap deal valued at $180 billion. Many analysts at the time believed the German company was overvalued.
— With files from The Canadian Press