Sky Mobile is to move beyond SIM-only contracts by offering customers the chance to conveniently upgrade their handsets.
The Swap service launches on March 30th and people can choose from a range of handsets by the likes of LG, Sony and Samsung.
Customers will be notified after 12 or 24 months when it is time for them to swap. They can then provide the details of their old handset online and choose a new one.
After the replacement has been delivered and set up, the customer will return their old phone, although they will have the option of keeping the handset and paying reduced monthly charges until the end of their contract.
Sky Mobile has hailed Swap as an affordable way for customers to get the phone they want when they want it, as it offers free delivery, no upgrade fees and no admin charges.
Stephen van Rooyen, Chief Executive of Sky in the UK and Ireland, commented: "Our mission to shake up the mobile market continues.
"This means no more paying for expensive upgrade fees or long waits to get the latest models.
"Customers are already loving the flexibility and great value of Sky Mobile and we expect Swap to make this the most compelling offer in the market.”
Sky has already billed its Sky Mobile service as the most flexible mobile service available.
According to the provider, consumers in the UK use less than half of the mobile data they buy every month on average, wasting around £2 billion a year as a result.
This means a typical pay monthly subscriber can pay more than £50 a year on data they do not use, all while paying exactly the same fee every month.
Sky Mobile has therefore been created to address this problem, so customers can keep their unused data for up to three years and redeem it whenever they wish, as well as be able to change their allowances every month.
Meanwhile, existing Sky TV customers can benefit from free UK calls and texts with any Sky Mobile plan, and also sync their handset with their Sky+ box.