Best Buy (NYSE: BBY - News) of the US and the UK's Carphone Warehouse on Thursday promised to unleash a far-reaching shake-up of the European consumer electronics landscape with a new joint venture.

Carphone also underlined its ambition to become the UK's largest broadband provider by making an indicative offer of £550m (€698m) for the British broadband assets of Tiscali, the Italian telecoms company.

Best Buy, the world leader in consumer electronics, is paying £1.1bn to Carphone for a 50 per cent stake in the European consumer electronics joint venture, into which Carphone is putting all its retail assets.

The arrival of Best Buy will add to the pressure on Europe's electronics companies, led by Germany's Metro and the UK's DSG International and Kesa, which operate chains including Media Markt, Currys and Darty and are struggling with low profit margins as competition from supermarkets and online rivals intensifies against the backdrop of a consumer slowdown.

Brad Anderson, Best Buy's chief executive, implied that his company was not buying Carphone outright because it thought it could have a bigger impact in the European consumer electronics market through a joint venture. "The Carphone Warehouse offers complementary capabilities as well as local customer insights."

However, people familiar with the situation said Best Buy might buy Carphone out of the joint venture eventually or even acquire the UK company.

Carphone's shares closed down almost 3 per cent at 290.5p after the company said the Best Buy transaction would dilute its earnings per share by 10-15 per cent in 2008-09.

Best Buy's shares were down more than 2 per cent in New York by midday at $42.43. The company said the Carphone transaction would be accretive to its 2009 earnings.

Charles Dunstone, Carphone's chief executive, brushed aside concerns that it was the wrong time to launch the joint venture given the global economic slowdown. "We are absolutely going to transform the face of retailing of consumer electronics products in Europe," he said.

Carphone is putting all its retail assets into the joint venture, led by its 2,400 mobile phone stores, which will retain the Carphone brand. Best Buy is planning European stores from next year under the Best Buy brand, starting in the UK.

Carphone is in pole position to secure Tiscali's UK broadband assets following the Best Buy transaction but it is expected to face competition from rivals such as BT and British Sky Broadcasting.