Carphone Warehouse is reported to have put in a bid to buy broadband provider Tiscali.
The company behind the TalkTalk brand is said to have put in a £450 million offer for Tiscali's UK business, thought to take up a 70 per cent share of the firm's revenue.
Tiscali, which put itself up for sale earlier this year, was subject to interest from Vodafone about a possible takeover before the mobile broadband provider pulled out at the last minute, citing an over-priced valuation.
With Tiscali's subscriber base, Carphone Warehouse could push itself above Virgin Media to become the second largest broadband provider in the UK.
Suggesting another reason why the move could be attractive for Carphone Warehouse, David Masters of the Telecom commented: "Carphone Warehouse sees buying the company as an attractive option, as the credit crunch has seen the number of new customers signing up to its services this year fall short of projections."