The UK arm of Spanish operator Telefónica O2, has introduced a tariff that allows customers to buy a new handset while tied in to a contract, without having to pay additional costs.

O2 Refresh is a 24 month tariff that separates the cost of the handset from the cost of voice, SMS and data services. When choosing to upgrade their handsets, rather than having to pay off the remainder of their contract, customers pay the remaining balance for the phone alone, and then restart their contract factoring in the cost of the new device. If they keep the old device, they move onto a reduced service only contract.

Under the terms of the tariff, customers choose a phone plan and a separate airtime plan and paying separately for each. This results in the customer paying the same overall as they would on a standard 24 month pay monthly tariff, according to O2.

Customers who want a new handset before their contract expires can opt to pay off the remainder of their phone plan, and end their Airtime Plan with no termination fee.

“Mobile phone technology continues to advance at a rapid pace, yet the way phones are sold has remained largely static,” said Feilim Mackle, sales and service director at Telefónica UK.

“Increasingly our customers are telling us that they don’t want to be tied to the same phone for two years and, with 4G coming to O2 this summer, we want to make it easier for our customers to benefit from the latest technology.”