Dixons is back in talks to sell Freeserve, the UK's largest internet service provider, to Deutsche Telekom's T-Online division.
Talks collapsed late last month, which sent Dixons and Freeserve's shares plunging. Speculation over why negotiations were halted centred on the price Dixons wanted. Dixons owns 80 per cent of Freeserve.
The retail giant was apparently keen to put a £6 billion price tag on the internet business, a figure which T-Online believed was too high. Now, however, with Freeserve worth less than £3.5bn, T-Online is reconsidering.
Last week, the markets were awash with rumours that the two parties had re-entered negotiations, the latest twist in an erratic courtship which has also seen Freeserve linked with cable firm NTL, with BT, and with Spain's Terra Networks.
But both Freeserve and Deutsche Telekom played down the story, pointing out that Wolfgang Keuntje, T-Online's chief executive, was on holiday and therefore unable to lead negotiations.
However, sources in the internet sector say the two sides have now resumed exploratory talks. 'It's not a dead duck. You don't get to the point where these two have got to and walk away completely. It comes down to what Dixons values Freeserve at,' said one source.
A combined company would see Freeserve's 1.9 million users pooled with its German counterpart's five million subscribers.
'It's still a good partnership and Deutsche Telekom has still got to find a way into the market,' the source added. Asked about the fact that Keuntje is apparently on holiday, the source said: 'He knows what's going on.'
One possibility would be for T-Online to take a minority stake in Freeserve. Following the collapse of talks with T-Online last month, John Pluthero, Freeserve's chief executive, hinted that this might happen.
'We do not expect a bid for the whole of Freeserve in the near future,' Pluthero said at the time - leaving open the possibility that the company could offer its shares to a number of strategic partners in a bid to help it develop a pan-European online network.
There had been suggestions that Freeserve's senior management team had threatened to quit if the company was sold to T-Online, but it is understood that Pluthero has privately stated his confidence in the German firm's business strategy. A link between the two ISPs could see Freeserve's portal introduced to Deutsche's One2One mobile phone network as a way of developing the operator's wireless internet services.
Freeserve was valued at nearly £9bn earlier this year, but the slump in the value of tech stocks, coupled with the falling prices ISPs can charge for providing internet access, sent the company's share price into freefall.
