New York: Verizon Communications Inc. is exploring a combination with Charter Communications Inc., the Wall Street Journal reported, in a deal that would create a telecommunications and cable giant and vault the combined company past Comcast Corp. as the No. 1 Internet provider in the US.

Verizon Chief executive officer (CEO) Lowell McAdam has made a preliminary approach to officials close to Charter, and Verizon is working with advisers to study a potential transaction, the paper reported, citing sources it didn’t name, with no guarantee a deal will materialize.

Shares of Charter rose as much as 10% to a record $341.50, their biggest intraday gain since March 2013, and were trading at $340.69 at 10:41 am. Verizon fell as much as 2.5% following the report. Dish Network Corp., the second-largest satellite-TV provider behind AT&T’s DirecTV, plunged 6.7%. Charter and Verizon declined to comment on the report.

A combination of Verizon and Charter would follow several recent industry mega-mergers, including Charter’s acquisition of Time Warner Cable and Bright House Networks, which made the Stamford, Connecticut-based company, partly owned by billionaire John Malone, the second-largest cable operator in the US behind Comcast. Verizon, while facing a slowdown in its core wireless business, is the No. 1 mobile carrier and No. 2 telecommunications provider.

Verizon and Charter would bring together thousands of miles of fiber-optic Internet capacity at a time of soaring demand for faster broadband. Though both companies have traditional pay-TV businesses, a tie-up would create a new internet Goliath to cash in on consumers binge-watching Netflix and Amazon Prime Video. A Verizon-Charter mega-deal would also mark a different path than the one taken by AT&T Inc., which acquired DirecTV in 2015 for its TV business and is now trying to buy Time Warner Inc., one of the largest media-entertainment companies in the world.

Cable and wireless companies also are exploring closer ties as the industry gets more saturated and consumers cancel their cable subscriptions for cheaper online alternatives—and go Internet-only. Both Comcast and Charter plan to enter the wireless business this year by re-selling Verizon’s wireless service. Verizon, meanwhile, is testing an advanced wireless service known as 5G, and would benefit from a cable operator and its wired network to help support the spike in traffic. Bloomberg

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