A 50-50 Tesco Mobile/O2 partnership, the service offers calls at a rate of 20p a minute, said Tesco Mobile CEO Andy Dewhurst.
Handsets cost from £69.99, but a launch promotion will give customers £25 off if they spend £25 in store.
Dewhurst said incentives to get customers to top up their phones at Tesco stores included four Clubcard points for £2 talktime sold through Tesco, compared to one point for £2 sold through other outlets. He added that E top-up was available from 41,000 outlets.
But Tesco mobile has caused controversy among independent retailers unhappy at being asked to sell top-up. (The Grocer, August 18).
A spokesman for PayPoint said it had decided retailers would not have to service Tesco mobile if they did not want to.