AT&T emerged as a contender for Yahoo after reportedly submitting a bid for the company’s core internet business, potentially setting up a face-off with US rival Verizon to secure the acquisition.

The US telecoms giant had so far stayed on the sidelines in the battle to acquire Yahoo’s up for sale internet unit, which has seen it hold talks with a number of suitors, including AT&T’s major rival Verizon.

Bloomberg reports AT&T had decided not to make an offer up until now after harbouring hopes it could facilitate a merger with Yahoo through its 47 per cent stake in digital advertising firm YP Holdings, but the latter is now reportedly not interested in pursuing such a transaction.

Verizon has long been considered as the frontrunner to buy Yahoo, and remains favourite, despite not submitting one of the biggest offers in the first round of bidding, adds Bloomberg. Yahoo has so far received more than 10 offers, ranging from between $4 billion and $8 billion, with the sale process likely to continue for another two to three weeks.

AT&T, which ended a 15-year web alliance with Yahoo earlier this month, could use Yahoo to help it compete with Verizon, which acquired AOL last year, and already owns advertising and media assets, similar to Yahoo’s business.

Despite AT&T’s interests, Verizon is still the more likely suitor for Yahoo, added sources, because of the synergies with AOL.

Other bidders include an investor group made up of Bain Capital, Vista Equity Partners and former Yahoo CEO Ross Levinsohn. Detroit investor Dan Gilbert, backed by billionaire Warren Buffett, has also been linked.

Yahoo officially announced it would explore a sale in February, following pressure from investors. The company last month reported a Q1 revenue fall of 11.3 per cent and a net loss of $99 million.