Business telecoms specialist Thus has said it is proposing to acquire its larger rival Energis for £800m.
Corporate phone and data networks are big business
Thus said it had approached the board of Energis' parent company Chelys about its plans, but had been rebuffed.
Thus is proposing to outspend Cable and Wireless, which put forward an agreed bid of £710m for Energis.
By revealing its interest in a counter-bid, Thus appears to be hoping to persuade Energis bondholders to allow C&W's bid to lapse.
Holders of Energis corporate debt have until 1700 BST on Monday to accept the C&W offer.
"We wouldn't have done it unless we believed it would be taken seriously by the other side," Thus chief executive William Allan said in an interview with Reuters news agency.
"It is certainly our intention to make this work."
Thus intends its bid to be largely in cash. It said it would pay £600m in cash, and £200m in Thus shares.
Energis' parent Chelys has responded by explaining why it rejected the approach from Thus last month.
It believes C&W's firm offer is better value than Thus' outline merger proposal as it consisted of a higher proportion of cash, and C&W's funding was more certain.
The overall value of C&W's bid was "appreciably higher" once its commitment to take on Energis' debt was factored in, Chelys added.
C&W said last week that it would not be raising its offer, which will lapse if it fails to win the backing of three quarters of Energis bond holders.
Thus urged Chelys shareholders "not to accept any proposal from any third party" until Chelys' board has allowed Thus "to present a definitive proposal".
Providing telecoms services to big corporations is seen as one of the most lucrative sectors of the telecoms market, and it has given rise to tough competition among a host of specialist companies.
Thus provides telecoms, data and internet services, and owns internet service provider Demon.
Thus said it believed consolidation within the UK telecoms industry would improve the sector's overall viability and bring about "sustainable competition".
It said "the combined group's positioning... would be significantly enhanced and consequently offer an opportunity to grow revenues and profits faster than either business could achieve on a stand-alone basis".
It also sees potential for "significant" cost synergies from the deal.
Thus was founded by Scottish Power in 1994, and spun off into an independent company in 2002.
Thus shares were suspended from trading on Monday whilst it sought the views of its key shareholders about its plans.
It needs to do this because swallowing the bigger Energis would count as a reverse takeover.