A proposed deal which would see Carphone Warehouse acquire the broadband provider Tiscali could be ideal for both parties.
According to the Times, a source close to the deal has suggested that Carphone Warehouse has long had an interest in the Italian telecoms group.
What is more, Tiscali's difficult financial situation could force through an agreement sooner rather than later, it has been suggested.
The source was quoted as saying: "Carphone has always been clear that it would be interested in Tiscali's UK arm at the right price and Tiscali has to take a decision soon."
Were a deal to be completed, Carphone Warehouse would take its customer base to 2.8 million users, making it second only to BT Group in terms of size.
In April, Carphone Warehouse revealed that it intends to separate its TalkTalk broadband and telecoms service from its retail arm into an individual listed company.