Freeserve, the Dixons-owned free internet service provider, has confirmed it is in talks with rivals internet services about possible merger deals.
John Clare, chief executive of Dixons, revealed that in addition to talks with the UK's biggest high street bookseller, WH Smith, conversations were going on with other rival firms. However, he stressed that they were at an early stage.
Clare predicted rapid consolidation in the free ISP market and said Freeserve was in a strong position to take over rivals or provide similar services for companies which decided their providers were uneconomical.
"In the wake of the success of Freeserve, a whole lot of people launched a free ISP because it was the trendy thing to do. What is now happening is that people are beginning to realise that being an ISP is time-consuming and expensive and in itself doesn't achieve anything," he said.
There are currently more than 250 free ISPs in the UK and analysts have been predicting that this will eventually fall to as few as six big companies within a couple of years.