"The boards of Dixons and Carphone Warehouse note the recent speculation and confirm that the two companies are in preliminary discussions regarding a possible merger of Dixons and Carphone Warehouse," the firms said in a statement.
(Read more: A "tsunami" of retail store closings?)
They said the discussions are at a very preliminary stage and there was no certainty a transaction will be forthcoming.
They said no decision has been reached regarding the structuring of any such merger.
Follow us on Twitter: