Orange plans to enter the fixed-line telephone market, the first move of its kind from a UK mobile phone group.
Orange plans to take on fixed-line giant BT
From April, the company will roll out the service to its business customers, but it has no plans yet to offer the service to domestic consumers.
Orange and internet group Wanadoo, both owned by France Telecom, will merge to offer bundled products.
Orange Landline for Business will offer firms with up to 250 staff a single bill for line rental and call charges.
The service will run over the network of Cable & Wireless, and Orange claims it will be 20% cheaper than the rival offering from BT.
However, Jeremy Green, telecoms analyst from Ovum, told the BBC: "I suspect this isn't the best discount you can get if you were prepared to shop around."
In response, Orange said there will be significant savings for small and medium sized companies.
"We say up to about 20%," said Alastair MacLeod, vice president of business solutions, Orange UK.
"For example, calls to companies' own mobiles, if they're an Orange mobile customer, will fall to about four pence, which is an incredibly aggressive rate.
"By bringing together mobile and fixed services, total spending for the customer will be reduced, and, by working with just one supplier, the supply chain and service support models will be simplified."
Orange currently has nearly 15 million customers in the UK and employs 12,000 staff.
France Telecom took full control of Orange in April 2004, paying £31bn for a majority stake.