O2 secures iPhone contract

Spanish-owned mobile phone operator O2 secured a deal to sell the iPhone in Britain after agreeing to give Apple 40 per cent of the revenue it will make from customers using the device, The Guardian has reported.

Apple will hold a London news conference today where it is widely expected to unveil its plans for the slick, touchscreen device that combines its popular iPod music player, a video player and Web browser.

The newspaper said on Monday that O2 had agreed to a margin on the retail price but would return to Apple as much as 40 per cent of any revenue it makes from customers' use of the iPhone -- far exceeding most industry expectations.

The Guardian also said Carphone Warehouse had secured the right to be the sole independent retailer of the device on behalf of O2.

O2 and Carphone Warehouse declined to comment, while Apple has declined to give details about Tuesday's news conference.

One telecommunications official questioned whether any operator would strike a deal that would hand 40 per cent of revenue to a handset maker.

"I can't imagine any of the operators agreeing to terms like that," the official said. "It is an extraordinary number."

But another source familiar with the lengthy negotiations with Apple said: "I had heard that they [O2] had gone beyond the comfort zone for pricing and that they were willing to go further than others were."

A separate source familiar with the talks has said that Apple is expected to announce a deal with Germany's Deutsche Telekom this week, and an announcement handing the French distribution deal to Orange is also expected shortly.

Orange and Deutsche Telekom have also declined to comment.

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