Tesco Mobile is offering customers the option to swap ads for money off their bill.
The budget mobile brand, which runs on O2's network, has partnered with Australian ad and content company Unlockd and will let Android mobile customers knock £3 off their monthly bill.
Tesco Mobile customers are able download an app from the Google Play store that will then flash location-based ads and offers everytime the phone is unlocked.
British Airways, McDonalds, Doritos, and makers of the famous pickle Branston have signed up to advertise on the platform, with more brands on the way.
The mobile market has become increasingly competitive in recent years as companies battle to offer customers the cheapest deal, the best coverage and the latest handsets.
Recently the European competition squashed a deal that would have seen O2 combine with rival network Three – reducing the number of carriers from four to three.
Unlockd chief executive Matt Berriman claims all of the telecoms companies Unlockd approaches demand to work with it on an exclusive basis as they look for the edge over rivals.
The company is in discussion with with various telecoms companies around Asia and Europe, and already works with firms in the US and Australia.
Unlockd recently scored £7.7m in funding.
Three recently re-ignited the debate about mobile ads by announcing plans to block them at network level.
Ernest Doku, telecoms expert at uSwitch.com, said:
Smartphone users aren’t unfamiliar with advertising on handsets – it’s the compromise of many free-to-use apps – so it’s likely cost-conscious customers will be happy to give this a try.
But whether mobile users are willing to live with ads in return for cheaper bills will depend on how intrusive they are, and how relevant.