Asda challenges BT with phone calls at half-price

The supermarket chain Asda pitched into the discount telephone call market yesterday, claiming it would undercut British Telecom by more than half on domestic and international calls.

The new Asda "Calltime" service will use pre-paid vouchers available initially at the checkouts of its 234 supermarkets, potentially giving the company 7 million customers - who, it said, could save a total of £726m annually.

"Calltime calls time on rip-off phone charges," said Asda's group marketing director, Richard Baker. "And the savings are huge - a call to the Big Apple is now just the price of a Golden Delicious."

A spokesman for the chain, which is owned by the American retail giant Wal-Mart, said: "Asda Calltime will provide a serious challenge to BT, which still enjoys over 80 per cent of the domestic UK telephone market some 15 years after privatisation."

But BT and other discount call rivals said the scheme was less attractive than it appeared. BT said that its customers should carefully compare the advertised savings - of up to 62 per cent on domestic calls and up to 85 per cent on international calls - with their own bills.

"There is a tendency to compare prices without taking into account our discount schemes, which are currently running at more than 30 per cent," said a BT spokesman.

"We would advise subscribers to consider the adverts against the actual bill they get from us."

Tim Ollerenshaw, a senior consultant at the independent telecoms consultancy Analysys in Cambridge, said: "If you have a discount offer like BT Together, it could be very hard to compare. You need to know the details of your bill and your calling pattern."

The best option would be to visit the Oftel-endorsed comparison website at http://www.phonebills.org.uk/.

Another rival, OneTel, said Asda's prices did not seem that attractive: "Unlike them, we don't have restrictions on when the discounts apply. And we offer calls for 2.5p per minute, against Asda's 3p, and a callto the United States for 3p against their 4p," said a spokeswoman for the company, which claims 800,000 British subscribers.

"We welcome competition, though, because it educates the market."

The Asda vouchers will be available in £5, £10 or £20 denominations. Buyers then have to call a freephone number to register the credit against their account.

To make cheap calls, the caller dials 1460 and then the actual number.

Many companies already offer low-cost calls to international destinations but few besides the big cable companies - Cable & Wireless, NTL and Telewest - offer local and national calls too. OneTel and Eurobell, the latter owned by Deutsche Telekom, the German equivalent of BT, are the biggest.