The supermarket giant Tesco said that it had hit a five-year deal with Cable & Wireless to assist it to supply broadband as well as home phone services, a move that could pave way for potential price-war in the industry.

Tesco announced its plans join the list of Britain's leading providers of telecoms services and products, which could generate £2 billion in annual sales, with annual profits of £200 million, for the supermarket group.

Tesco's recent move will put it into direct competition with other broadband providers such as BT and Virgin Media.

Speaking on the issue, Tesco's CEO Lance Batchelor said, "Tesco Mobile has shown that we can be successful in telecoms if we have the right partners and the right offer."

Mr. Batchelor was speaking at a two-day series of seminars on Tesco's plans to spread out its existing retail business.

Mr. Batchelor further added that deal with Cable & Wireless would allow the company to present very competitive pricing.