DSG INTERNATIONAL, the electronics retailer behind the Currys, Dixons and PC World shops, is understood to be in talks to sell The Link chain to O2, the mobile phone group.

The acquisition of the 300store chain would give O2, which was bought last year in a record £17.7 billion deal by Spain’s Telefónica, key sites from which to sell its phones directly to consumers, cutting out the middle-man.

Talks between the parties are continuing. There appears to be some wrangling over the price, although the final amount is expected to settle “in the low tens of millions”.

O2 already holds a 40 per cent stake in The Link, which it inherited when it demerged from BT more than four years ago. BT had bought the stake for £25 million in 1997.

Cut-throat competition in the market from supermarkets as well as rivals such as Carphone Warehouse has taken its toll on The Link, which has conceded market share. The chain, which has 2,300 employees, recorded sales of £428 million last year.

In a statement last month, DSG revealed a 25 per cent slide in like-for-like sales at the chain over the year, which John Clare, chief executive, described as “disappointing”.

DSG is due to report its full-year results on Wednesday, at which it is believed it could put out news regarding the acquisition.

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