According to reports in the Telegraph the aim of a deal would be to shave around £10m off KCOM's bottom line and shares have rallied on the expectations that tomorrow a deal will be announced linking its internet and managed services (I&MS) division with BT.
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Earlier this year KCOM took the axe to 150 staff including some in the managed services business.
The company has consistently pointed to the downturn as a cause for concern with its decision to cut staff being made against a background of "economic uncertainty".
According to the reports a deal with BT could be announced tomorrow but the Daily Telegraph also hinted that if the outsourcing option fails to come off then a sale of the I&MS operation might be considered.