Is the Tesco £20 a month iPhone a better deal than O2 or Orange?

Big day today for Tesco have confirmed that it will be selling the iPhone from Monday 14th December. The supermarket have also gone in aggressively with a £20 per month tarriff and a 12 month contract option. On paper it looks like the hottest iPhone deal yet.

There is however one big drawback and that's the initial fee for the handset. For £222 customers can pick up an iPhone 3G 8GB, with a £20 monthly fee for 12 months giving the user 300 minutes and 600 texts per month. It will also come with £60 worth of free credit.

With just a 12 month contract to be tied to,Tesco will happily let you upgrade to a brand new phone once the contract is up. Grab the phone on a two year, £60 a month contract and you'll get unlimited calls and texts as well as unlimited web access (subject to fair usage).

£320 up front will grab the iPhone 3GS 16GB on the same contract, and is also free if you splash out on the two year contract option. The 32GB iPhone 3GS will set you back £407 on a 12 month contract with Tesco Mobile, or just the £50 monthly fee on the two year deal.

All will also be available on Pay As You Go deals, coming in at £342, £440 and £538 respectively.

So do the figures stack up? Well let's take annual fees for the 8GB basic model

Tesco - £462 per year (£202 plus £20 per month)

O2 - £417.12 per year (£34.76 per month - free handset)

Orange - £352.32 (£29.36 per month free handset)

So on the face of it the Tesco deal doesn't look that great. However the O2 and Orange deals are for 18 months while the Tesco deal is for 12. Let's assume that you continue on a £20 per month tarriff (though I'd bet money it would be cheaper by 2011)

The figures are then

Tesco - £582

O2 - £652.68

Orange - £528.48

The Tesco deal doesn't look so bad then, but Orange still looks the best value.

It is worth bearing in mind though that by 2011 the 8GB iPhone will be a virtual antique and there will be many better phones out there - not just from Apple but from other makers too. So you will probably want to buy another handset anyway. Also how much will a second hand 8GB iPhone go for after 12 months? £200? It really is anyone's guess.

I think the Tesco move is a smart one as it enables people to buy iPhones as Christmas presents without the person who gets the phone being tied to a high tarrif.

So it is really hard to say who has the best deal. A lot depends on your personal preference.

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