Carphone steps up price war with launch of free local calls

Carphone Warehouse, the mobile phone retailer, will this week fire the latest salvo in its price war with BT with an offer of free local calls.

The deal is expected to be announced as part of package of new offers from talktalk, Carphone's fixed-line services.

It would create a similar price structure to that seen in the United States where the cost of free local calls is paid for by charges for national, international and mobile calls.

Charles Dunstone, founder and chief executive, will reveal the company is on track to meet its subscriber target of 400,000 by the end its financial year, which ends this month.

The company is likely to set a new target for talktalk, which was launched just over a year ago, probably to hit 1 million customers by the end of this year. It is hopeful it will start making a profit for the group next year.

A spokesman declined to comment but said the company would be making an announcement on Thursday.

Carphone has used talktalk to go head-to-head with BT, which still controls 70 per cent of the residential market with its 20 million customers. The company has even hired Maureen Lipman, the star of BT's long-running advertising campaign in the 1980s. It claims to offer savings of up to 30 per cent off a BT phone bill.

Regulatory changes in 2002 made it simpler for customers to switch to alternative providers. Previously, consumers either had to type in a code before every call or fit a box to their existing socket.