Tesco and O2 in mobile deal

Grocer turns telco

Tesco is to punt its own-brand mobile phone service alongside tins of baked beans and jars of pickle.

The monster supermarket chain is teaming up with O2 to create a new 50:50 joint venture - Tesco Mobile - which will flog Tesco-branded mobile services in its stores across the UK.

Both companies plan to invest £8m in the JV over the first two years of the tie-up. Neither side can pull out of the deal before 2008.

The new service is expected to be up and running in time for Christmas with handsets on sale in Tesco stores. Punters will get access to supermarket-style offers and the chance to earn Clubcard loyalty points when they buy handsets and airtime, Tesco said.

In January, Tesco announced it was working with Cable & Wireless to create a fixed line telecoms service from early summer 2003.

Called Tesco Telecom, the fixed line service will give punters what's been called "supermarket-style" offers for their phone calls.

The service is based on Carrier Pre-Selection (CPS) technology that does away with the need for callers to use PIN codes and prefixes, or install special boxes in order to use a new telecom service.

Supermarket rival J.Sainsbury is also entering the telecoms business after joining forces with Carphone Warehouse to provide mobile and fixed line telecoms services. Called TalkTalk, that service is due to go live later this month. ®

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