Pipex, one of Britain’s first internet service providers, is thought to have held talks with BT last year. It is also regarded as a likely target for players including BSkyB and Carphone Warehouse, Europe’s biggest mobile phone retailer, as they seek to scale up their broadband customer bases.

However, Mr Dubens said that Pipex, which will today publish a full-year trading update, is not in talks with anyone at present.

City sources believe that Pipex, whose brands include Freedom 2 Surf, may look to divest of parts of the business, such as its internet hosting division, making it easier for interested parties to snap up its consumer and small business broadband customer base.