Tesco Starts Christmas iPhone Price War

£20 a month contract significantly cheaper than competitors.

Supermarket Tesco has started a new price war in the mobile market with its new ultra-cheap iPhone tariff.

Ever since retail superpower Tesco announced it was going to unleash the iPhone onto the UK markets in its stores, consumers have been buzzing to find out how competitive Tesco Mobile tariff rates will be.

The supermarket has been bold offering a £20 monthly contact on its network, cheaper than the closest competitors Orange by some margin. The cheapest monthly Orange deal currently available in the UK is £29.36 which locks customers in to an 18 month contract.

In a market first, Tesco has broken with tradition and offered a much shorter term 12 month contract. As more players enter the iPhone market, ensuring customer loyalty with longer term contracts has been a ploy of O2 and Orange. However, as the market gets more competitive, Tesco has broken the mould with its new tariff.

New customers will have to pay £222 for the 8GB iPhone model and £320 for the iPhone 3G S 16GB. Pay-as-you-go contracts will also be available from Tesco Mobile but will increase the price of the handsets to £342 and £440 respectively.

Chief executive of Tesco Mobile Lance Batchelor said: “iPhone is now available and affordable for all. It shows what a serious player in the mobile market Tesco Mobile has become,” reported The Times. Other networks will now have to respond to Tesco’s cheap entry to the market with a price which is equally competitive.

By Carla Windsor posted December 10, 2009 6:31 AM