O2 UK has created a new tariff that separates the subsidised cost of a mobile phone from a minimum-term airtime contract.

Launching on 16th April, O2 Refresh has a 24-month airtime plan and a separate finance agreement for a ‘phone plan’. Customers who want a new handset before the end of their minimum contract term can pay for the remainder of their Phone Plan and start a new Airtime Plan with no termination fee.

T-Mobile USA - the nation’s fourth-largest mobile network operator - has dropped annual contracts and is instead moving to a single ‘unlimited’ monthly tariff.

The news came as the company also launched its 4G LTE service in the United States.

Tesco Mobile, which operates as a joint venture with O2 UK, has announced a ‘Tariff Promise’ to never raise its monthly mobile phone charges during the minimum term of a contract.

The news comes just a week before the end of Ofcom’s consultation into mid-term price rises.