Vodafone and Hutchison Whampoa's 3 are close to agreeing a deal to merge their Irish telecoms infrastructure, sources familiar with the situation said.

The deal could be the latest industry tie up designed to save costs and boost coverage.

The sources asked not to be named because the talks were not public.

But they nothing had yet been signed between Vodafone and Hutchison Whampoa, the Hong Kong-based conglomerate that operates the 3 mobile brand in Ireland.

The merger will create a 50-50 joint venture that would result in the biggest network in Ireland while producing "significant" cost savings, one of the sources said without elaborating on the size of the savings.

The Financial Times newspaper said the savings for each business could exceed £200m sterling over a five-year period.

The talks follow several similar deals across Europe where operators are looking for ways to upgrade their networks at a time when customers are cutting back on spending.

Vodafone announced a deal in June to share a network in Britain with Telefonica's O2 to help cut the cost of building a new superfast service.

In Ireland, Vodafone and 3 would put the telecoms infrastructure into the joint venture but maintain their independent spectrum and retail services. Both companies, which declined to comment, also compete with O2 and Meteor Mobile, owned by the Eircom Group.

"Such an agreement would have the potential to significantly improve network quality, speed to market with 4G, lead to much better cash generation and enhance returns on capital in the Irish market for both companies," analysts at Espirito Santo said, in reference to upgraded fourth generation networks.