Telefonica O2’s German arm has launched a SIM-only discount mobile service that claims to offer significant customer advantages over other low cost offerings.

The service, Fonic, is available online, as well as through a partnership with discount supermarket chain Lidl. There is a EUR9.99 one-off charge for the SIM, but the service has no contract or monthly line rental, and offers calls and text messages to all domestic networks for just EUR0.099 (that 0.1 of a Cent stays in the customer’s pocket. Ker-ching) per minute/text.

There are some innovative elements to the service. Should customers wish to discontinue the service, Fonic will refund any unused credit. Customers can check their credit at anytime, either online or by calling a freephone number. Should credit drop below three Euros, an automatic text alert warns users that it’s time to top up.

Recharging can be done online, or by call or text message (recharge calls and texts are free). Alternatively, a regular monthly payment can be set up that tops up the account automatically.

Unlike some other low-cost and prepaid services, credit remains valid indefinitely with Fonic.

If successful, Telefonica O2 could attempt to replicate the service in its other markets.