In a trading update, the retailers confirmed they were in "preliminary discussions" over a merger.
The statement said that discussions are at a "very preliminary stage", and that there is "no certainty" that a merger will go ahead. It added that "no decision" has been taken on the potential structure of such a merger.
Mobile phone retailer Carphone Warehouse operates over 2,000 branches across
Over the past 12 months, the . Carphone Warehouse chief executive Andrew Harrison and Dixons chief executive Sebastian James claim the scheme will help "bridge the digital divide" in the nation’s schools.
A desire to "optimise" branch networks is behind the merger, according to CSS Insight founder Shaun Collins.
He said: "The rationale for this move is clear: both retail chains offer similar ranges of connected products and are looking to optimise their retail networks. It emphasises our view that devices have become a continuum, differing only in screen size.
"Despite the shift to Internet sales, a presence on the high street will continue to be important, and a new entity has the potential to reshape mobile retailing in
After a rocky period, Dixons has pushed back into profit in recent years on the back of an increased focus on after-sales services.
Last month, the company revealed a five-fold increase in underlying profits in the
Earlier this year, Dixons , overseeing its brands in
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