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Cashback Explanation

Can someone just quickly explain what this Cashback thing is all about. How and why will a mobile company give me money for nothing? For instance, http://www.onecompare.com/buy-a-mobile-phone/best-mobile-phone-deals/sony-ericsson/k810i.htm?skn=moneysavingexpert, the T-Mobile deal says I can reduce a £35/month contract to merely £2.92. Absolutely crazy, lol. Will appreciate some clarification on the issue.

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