Discounters Enter German Cell Phone Market

German supermarket chain Aldi will unveil its new prepaid cellular phone service, Aldi Talk, this week at rock bottom prices, in what promises to be a frontal attack on the German wireless market.

The company has partnered with Royal KPN NV's E-Plus and electronics dealer Medion AG to offer customers service that costs 5 cents per minute to between Aldi calls and about 15 cents per minute to land lines and other service providers. Both rates are far lower than the average of 20 cents per minute airtime rate that most other providers charge.

And while a few others do match those cheap rates, most don't have the marketing power of Aldi with its well-known brand name and 4,000 stores in which three out of every four Germans frequent.

Still, when other cut rate competitors showed up on the market last year, mostly through the internet, average rates declined by half.

Aldi is reportedly able to offer such low prices because it has guaranteed 750,000 contracts to E-Plus.

Others may join the fray

And the wireless market may even face greater competition as reports of discounters Lidl and Plus are considering offering their own cell phone service at rock bottom prices.

The cell phone market is an interesting one that Lidl has watched for a long time," a spokesman for the chain told Tagesspiegel. "But we have not made a final decision yet."