Tesco has created a 50-50 joint venture with mobile phone firm mmO2 to sell Tesco branded mobile phones using mmO2's technology and network.
Tesco said the joint venture, called Tesco Mobile, would launch in time for Christmas and aimed to win around two million customers within its first five years.
Mmo2 Chief Executive Peter Erskine said the venture was part of the mobile phone firm's plans to tackle competitive market conditions with a range of different offerings.
Tesco Chief Executive Terry Leahy said the venture was part of the chain's strategy of branching into new retail services, such as Tesco Personal Finance and Tesco.com.
Tesco and mmO2 will each invest £8m sterling in the venture over two years. It is then expected to be profitable.
