TalkTalk has emerged as the frontrunner to acquire Blinkbox, Tesco's loss-making video streaming service. A deal could be announced as soon as next week, when new Tesco chief executive Dave Lewis unveils his strategy for turning round Britain's biggest retailer and shoring up its balance sheet.

However, sources said talks were ongoing and any deal could yet fall apart, adding that any consideration would be small because of Blinkbox’s losses.

For Tesco, a sale of Blinkbox would show that Mr Lewis is getting on with cutting costs and refocusing on the retailer’s core UK grocery business.

TalkTalk could use Tesco’s service to bolster its TV business, which is already the fastest-growing TV provider in the UK with more than 4 million customers. – (Copyright The Financial Times Limited 2014)