Telecoms companies are involved in a fixed-line price war

Carphone Warehouse, whose core business is mobile phones, has promised �500 to any BT customers who find they are paying more after switching to its fixed-line telephone service.

BT claims the promotion fails to take into account its latest package, BT Together, and criticised the small print which requires a minimum �12-a-month spend.

Angus Porter, managing director of BT's consumer division, said the phone bill challenge was "out of date".

He said: "They made a big deal of their �500 challenge to BT customers, but there's not much point in a challenge which excludes all those customers on BT Together packages".

German deal

The new package scraps charging per minute for all evening and weekend calls and offers a single rate for UK and local calls.

Under the new payment scheme, BT Together customers will pay six pence for up to an hour of calls anywhere in the UK.

But the mobile phone retailer, which entered the fixed-line market last year, said it stood by its promotion.

Charles Dunstone, chief executive of Carphone Warehouse, told the Financial Times: "We've got to have something physical to compare costs with.

"But any BT customer is eligible for (the promotion) whatever tariff they are on."

Meanwhile, Carphone Warehouse is playing down reports that it is to buy the German business of Hutchison Telecom in a deal worth �40m ($65m).

A company spokesman described the media reports as "just a market rumour", adding that they would clarify the situation in Germany on Tuesday.

In March, Carphone Warehouse had said it would either close its loss-making German business or build on it.