Carphone Warehouse has said that it is in talks with Currys and PC World owner Dixons Retail over a possible merger of the businesses.

Both companies said that the talks were at a very early stage and that there was no certainty that a merger would actually go ahead.

Dixons Retail operates over 500 stores across the UK and Ireland as well as owning the Elkjop group in the Nordic region and the Kotsovolos retail business in Greece, whilst Carphone has over 2,000 outlets across Europe.

The announcement comes after both companies reported good recent results, with Dixons’ like-for-like sales up 5% in the three months to January 4th and Carphone Warehouse seeing a 3% rise in like-for-like sales in the three months to December 28th.

Phones4U, Carphone Warehouse's rival, has a partnership with Dixons, and offers mobile phones to customers at PC World and Currys.