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Monday, August 2, 1999 Published at 18:00 GMT 19:00 UK

Business: Your Money

Mobile phone price war

Supermarkets take up the challenge to slash mobile phone prices

The UK's biggest supermarket chains have cut the price of pre-paid mobile phones by up to 50% in a price war.

Asda said it would sell Cellnet pre-paid mobiles for £39.99 from Tuesday in response to an announcement by Tesco's that it was offering mobiles from all four major network operators - Cellnet, One 2 One, Orange and Vodaphone - for only £49.99. Sainsbury's has also joined in the scrap.

Tesco's began the price war by challenging its competitors and the network operators to make pre-paid mobiles more affordable for consumers.

Big reductions

The network operators, other supermarket chains and high street stores, such as Carphone Warehouse, sell the packages for between £69.99 and £79.99.

Tesco's commercial director John Gildersleeve said: "We are introducing some real price competition.

"We want to do the same to the mobile phone market as we have done to the computer market - making them easily accessible at realistic prices."

Tesco's has already sold 230,000 pay-as-you-talk mobile phones in the UK. Pre-paid packages allow customers to buy a phone handset and starter pack without signing a service contract or paying monthly bills.

Instead, customers buy top-up cards from retailers to give them call time.

The Asda spokesman added: "We are planning to introduce pre-paid phones from the other three major network operators as soon as possible and will keep customers updated.

A Sainsbury's spokeswoman said it had also cut the price of its pre-paid mobile range to match Tesco's: "We sell the Vodaphone and One 2 One mobiles and they are a very popular range.

"We are keen to offer our customers the best price for them and from tomorrow both will cost £49.99."

"Not a charity"

But one of the country's leading pre-paid mobile phone operators, One 2 One, hit back at the supermarket chains and refused to cut the cost of its pre-paid service.

A spokeswoman said: "It's the handset manufacturers that should be asked to bring their prices down, not us.

"We are not actually a charity. Our lowest price pre-paid handset costs £69.99 and that comes with a start-up pack for new customers.

"We already subsidise every handset by about £200 and there is no way we can bring down the price any further.

Timely reminder

Mobile phone users have been urged to be more considerate when using their phones, switching them off during films and plays.

Cellnet has launched a £150,000 campaign to promote more responsible mobile use.

The Switch It campaign uses a public information film to be shown in UK cinemas from Friday to highlight its message.

It explains that the convenience of mobile phones does not give users the right to intrude on other people's lives by interrupting films or plays, spoiling the enjoyment of restaurants or disrupting business meetings.

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