Tesco is to join forces with O2 to operate a new mobile network from next summer, with the retailer promising to deliver a "value for money" product.
Under the arrangements, Tesco will effectively become a mobile virtual network operator (MVNO). An MVNO is a company without its own network infrastructure or spectrum which uses the network of another company. The new service will use an 089 prefix.
Tesco has set up a new company, Tesco Mobile Ireland, with its own board and management. It will use O2's network, but all the branding to customers will be Tesco Mobile.
An investment of €30 million over three years is involved, said a Tesco spokesman yesterday. He said Tesco had already taken approximately 5 per cent of the petrol market in Ireland and in order to grab a strong share of the mobile market its offering would have to be competitive.
Last night, some of rivals to the Tesco service reacted to the announcement. In a statement, 3 said: "More choice for consumers means more people think about switching instead of remaining with the old networks."
Tesco has already worked with O2 in the UK where a similar service is offered. From the summer Tesco will be selling handsets throughout its Irish stores, with prepaid package available to shoppers. Bill pay options are expected later.
Shoppers will purchase the phones in store and can immediately register with Tesco Mobile. The exact per minute rate to be offered has not been disclosed. Tesco and O2 are to begin discussions with other mobile firms about getting number portability.
