Optus will progressively pull the pin on its mobile virtual network operator agreement with Woolworths, leaving the retail giant to look elsewhere for a service provider.
Woolworths will stop selling Optus-powered Woolworths Mobile prepaid SIM cards in stores from October 1, though existing customers would see their services continue as usual.
"Existing Woolworths Mobile customers can continue to recharge in store and online for another 12 months," an Optus spokesperson said.
"After this time, customers can recharge by purchasing an Optus recharge voucher.
"Customers who have a Woolworths Mobile prepaid product will continue to receive all the same great value and benefits that Optus customers have."
News of the shuttering of the MVNO agreement first leaked to broadband forum Whirlpool on Saturday.
A leaked notice to Woolworths retail staff said beginning today, an Optus representative would visit stores to audit and remove stocks of Woolworths Mobile SIM cards.
The retailer said recharges would be available for "the foreseeable future".
A Woolworths spokesperson told iTnews that the company isn't looking to exit the MVNO market altogether.
"We are currently reviewing our options to ensure we can continue to offer a great value prepaid service to our customers," the spokesperson said.
"Woolworths Mobile has been very popular with our customers. We have seen customer numbers double year on year, since launch in 2011."
The MVNO market is under increased pressure, mostly owing to thin margins in the business, which have seen a string of similar agreements cut in past months.
The situation is a stark change from just two years ago, when MVNOs were credited with growing the customer bases of Australia's largest telcos.