Spanish blog myucomputer.com claims to have first hand knowledge that confirms that Microsoft will be announcing a Zune-themed phone at Mobile World Congress, powered by the same Tegra chipset as found in the ZuneHD.
Like the ZuneHD the device will also have HDMI-out capability, but retain the 480×272 screen.
They go on to speculate that the device will feature Windows Mobile 7, but this early in the day its likely to be the cut down non-multi-tasking version rumoured rather than the real release we will see towards the end of the year.
At WMPoweruser.com we find the rumour believable, and will make sure we are there to bring you the first pictures of the device.
Thanks Rakesh for the tip.