NVIDIA and Microsoft are rumored to be working on the Tegra-based Zune Phone and the new mobile phone should be ready for show at the Mobile World Congress 2010.

TCMagazine reports that the Zune Phone will be powered by NVIDIA’s Tegra SoC, so it would share lots of features with Zune HD, like the 480×272 touchscreen, WiFi connectivity, HD video playback capability, 3D games support and etc.

The Zune Phone is expected to run Windows Mobile 7 and will become available later this year.