Tesco Mobile is a joint venture between the retail chain, which is the U.K. equivalent of Walmart, and wireless provider O2. According to the Financial Times, customers will be able to purchase an iPhone 3G at a slightly higher £222 ($361) up-front price, but with a shorter term 12-month contract.
Carrier O2 does not offer a 12-month contract, and charges £34.26 ($55.74) per month for the iPhone with a two-year contract. At that price, users can get the iPhone 3G for free.
Tesco Mobile will also offer the iPhone 3G for free with a two-year contract, but its monthly plan adds up to £702 ($1,142.15) over the 24 month span, compared with a cost of £822 ($1,337.39) with competitor O2. While both companies share the same network, O2's costlier plan will give customers 600 minutes per month, and Tesco customers will get only half that.
Unlimited calling with Tesco will run £60 ($97.62) per month with a 24-month contract. The Financial Times also noted the iPhone 3GS will cost £320 ($520.64), though it did not note whether that was the 16GB or 32GB capacity.
In November, Tesco announced they would provide the iPhone 3G and iPhone 3GS at Tesco Phone Shops in the U.K. Though products are branded Tesco Mobile, they rely on the O2 network.
The deal has been compared to Apple's introduction of the iPhone at Walmart in the U.S. The world's largest retailer began selling Apple's phone 18 months after it first debuted.
In the U.K., O2 was the exclusive provider of the iPhone until September, when it was revealed that competitors Vodafone and Orange would also offer the device.