Vodafone has launched two ultra low-cost handsets under its own Vodafone brand. The launches form part of Vodafone's strategy to expand in developing markets.

The Vodafone handsets, manufactured by China's ZTE, will be available in Egypt, Romania and South Africa next month, Vodafone said today. The ultra-cheap Vodafone handsets are expected to cost between $25 and $45 (£13-£23).

With mobile phone penetration rates nearing or already exceeding 90 percent in many of its European markets, Vodafone has embarked on a strategy to expand in emerging markets, such as India, where mobile phone penetration is still low. Part of this strategy includes offering handsets that people in these markets can afford to buy - and Vodafone can afford to offer.

The Vodafone 125 model, the less expensive of the two new inexpensive phones, has a black and white screen. The more expensive Vodafone 225 model offers a colour screen.

The two Vodafone phones, each offering up to three hours of talk time, will provide only voice and text message services. Future models will offer additional features, such as an integrated radio, according to a Vodafone spokeswoman.

The 125 and 225 models are the first two ultra low-cost handsets to be manufactured by ZTE under an exclusive agreement reached with Vodafone at the end of 2006.

For the past couple of years, Vodafone has been putting its own name on handsets to keep its brand in front of customers.

In the course of this year, the Newbury, England, operator plans to launch ultra low-cost phones in 14 additional markets where the company this month received government approval to acquire a majority stake in Indian mobile services operator Hutchison Essar.

However, Vodafone doesn't plan to offer the low-cost phones in any of its developed markets, according to the spokeswoman. "The focus now is on quickly helping bring communications to people in developing markets," she said.

Numerous other mobile phone operators and vendors have their sights set firmly on this segment.

On 3 May, Nokia launched seven mobile phones for emerging markets, including two intended for shared use by families or entire villages.

Texas Instruments is developing a broad range of chips for low-cost handsets aimed at developing countries. The company plays a big role in determining handset costs; it's the world's largest maker of the most expensive part of a mobile phone -- the chips that run them.