Carphone to launch service on Vodafone

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Carphone Warehouse, the UK mobile-phone retailer, has teamed up with Vodafone to launch a new low-cost mobile-phone brand called Talkmobile, ending a perceived feud between the two companies.

Vodafone and Carphone Warehouse came to blows last year after the mobile operator signed an exclusive deal with the retailer's rival Phones 4U to sell contracts. Shares in Carphone suffered in the wake of Vodafone's move as analysts pondered whether the days of independent mobile-phone retailers were numbered as mobile operators looked to save costs by handling more sales directly.

A year on and Carphone Warehouse has signed up Vodafone to support its new mobile virtual network operator, despite already having a capacity deal with T-Mobile for its Fresh and TalkTalk Mobile brands. Analysts said the new network deal shows that the relationship between the two companies is far from broken and heightens speculation that Carphone could soon be selling Vodafone's contract subscriptions in the UK.

The new brand – Talkmobile – is aimed at low-spending contract users or people looking to upgrade from pre-pay services without committing to a long-term deal, with customers only having to sign up for nine months. The cheapest offer available costs £12 a month, with more expensive contracts factoring in more inclusive minutes and texts. Replicating its free "on-net" calls policy in the fixed-line market for calls made to other users on its network, customers will get 500 free texts a month to fellow Talkmobile users. International calls and texts will also be factored into the inclusive minutes.

However, calls outside the inclusive bundle are more expensive, pitched at 20p a minute and 10p per text message.

Analysts said that Carphone is gunning for a market segment that the larger operators – including Vodafone – have ignored, with the exception of 3 UK and Virgin Mobile.