Apple European iPhone deals expected next week

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UPDATED: A report published today by the Financial Times indicates that Apple has finally signed up three European mobile phone carriers to sell its iPhone smartphone, due to go on sale in the UK and mainland Europe in the fourth quarter of this year.

O2 has reportedly won the contract to carry the phone in the UK, with T-Mobile of Germany and Orange France also signed up to offer the phone in their respective markets, according to a report first published by FT Deutschland. This is in contrast to previous speculation that Vodafone was the frontrunner for the UK contract.

The deals Apple has reportedly with signed with the carriers to exclusively sell its iPhone involve unprecedented levels of revenue sharing. The operators have agreed to hand over 10 per cent of the revenue from calls and data services in return for the exclusive rights to carry the iPhone, according to sources cited by the FT as familiar with negotiations.

Although Apple has struck a similar revenue sharing deal with its US iPhone carrier AT&T earlier this year, analysts have said these European deals mark a shift in the balance of power between handset makers and operators.

RIM, the Blackberry manufacturer is the only other handset maker known to have entered into similar revenue sharing deals with operators.

But the European iPhone operators are likely to have been willing to sign such deals in the hope of replicating the success AT&T has had with the device in the US and so staving off declining fixed and mobile voice revenues.

Some 150,000 devices were activated within 36 hours of it first going on sale in the US in June. And Apple last month said it was on track to sells its millionth device sometime during its current fiscal quarter ending September.

The deals are also said to be relatively risk free as far as the operators are concerned, as Apple will not allow the device - sold in the US at $499 or $599 (ï252 and ï302) - to be subsidised.

And the deals are likely to add to the exclusivity of the iPhone, as the UK, France and Germany will be the only European countries where it will be available Initially, with the roll out across the rest of the continent and to Asia scheduled for next year.

However, Pete Cunningham, senior analyst in the mobile team at Canalys told IT PRO he didn't think the deals Apple has reportedly struck with O2, T-Mobile and Orange would have any profound impact on the market.

"It's no surprise Apple has targeted the largest operators in each of these country's markets," he said. "And it's not unusual to see operators awarded exclusive rights to a device if it's seen as desirable enough - it enables the vendor to charge more."

Cunningham said the reports that Apple will not allow the operators to subsidise the iPhone raised some questions. If that were true, he said the higher, upfront cost to the consumer may offset the impact of revenue sharing agreements on the operators.

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