The mobile phone retailer and TalkTalk operator is to spin off its 2,400-strong retail store network into a joint venture with Best Buy, with aims to open stores selling electronic goods from TVs to PCs and laptops throughout the UK and Europe.

Best Buy – one of America's biggest names in electronics retailing – has agreed to pay £1.1bn to buy a 50 per cent stake in the new firm, which will mark Carphone Warehouse's first concerted push into the wider consumer electronics market.

Carphone Warehouse will retain its broadband operation, including TalkTalk and AOL Broadband, and plans to use the cash made from the transaction to further develop its fixed line telecoms business and reportedly fund a war chest to snap up struggling rivals.

It is thought that some of the money raised may go towards a potential bid for the UK operations of the broadband firm Tiscali, which has been put up for sale.

Carphone Warehouse confirmed it was looking at Tiscali, but said it was "early days".

Under the deal with Best Buy, the Carphone Warehouse and Phone House brands will remain as high street stores, but the new venture will see larger retail park-sized consumer electronic Best Buy stores launch across both the UK and Europe.

The new outlets are set for roll-out in 2009, although Carphone Warehouse suggested UK consumers may see the brand appear on these shores sooner.

The news comes after mounting speculation over an imminent deal between the two companies. They have been working together for around two years, collaborating to bring Geek Squad, a 24-hour computer support task force, to European markets, while Carphone Warehouse has also been working with Best Buy on its US mobile phone offering.

And Best Buy already owns a 3 per cent stake in Carphone Warehouse.

But the deal leaves the existing ownership structure of Carphone Warehouse intact, with founder and chief executive Charles Dunstone retaining his stake of just over 30 per cent.

Mr Dunstone said: "The announcement marks the next big step in the Carphone Warehouse's growth story."