Goldman hired to review Freeserve

Dixons, the high street electrical retailer, is understood to have hired the investment bank Goldman Sachs to conduct a wide-ranging review of its Freeserve subsidiary, which could lead to a merger or outright sale of the business.

Under the terms of last year's Freeserve flotation, Sir Stanley Kalms, the Dixons chairman, is prevented from selling any more of the group's holding until July. Dixons currently has an 80 per cent stake in Freeserve.

But the appointment of Goldmans will fuel speculation that Dixons is keen to find a partner for Freeserve. There have already been rumours that Deutsche Telekom's internet offshoot, T-Online, and British Telecom may bid for Freeserve.

Freeserve, valued at more than £4bn, pioneered subscription-free internet access, making its money by taking a share of telephone charges. Its leadership of the UK market has been threatened by competitors such as NTL and AltaVista, who are launching flat-fee services providing unlimited internet access.

A spokeswoman for Dixons last night refused to comment on whether it had hired Goldman Sachs, saying: "We engage investment banks all the time to advise on a variety of projects. In any business, options are continually under review."

Earlier this year Freeserve announced a link with BT to allow people to receive films and television programmesdown telephone lines. But last month if failed to forge a partnership with the magazine publisher Emap, which chose to put its content online itself.