O2 chases iPhone deal

Mobile-phone operator O2 is believed to be discussing a prestigious deal to be the exclusive network partner for Apple’s iPhone in the UK.

According to the Financial Times, sources familiar with the matter believe that an agreement between O2 and Apple is imminent.

The much-anticipated iPhone combines a wireless phone with music- and video-playing capabilities and Web browsing.

Apple has already started selling the device in the US, where an estimated 500,000 units were sold in the first two days after its launch.

iPhone is expected to go on sale in UK, and other European countries, this autumn. The roll-out will be extended to Asia in 2008.

If O2 is awarded the deal it would be a big boost to O2 and its Spanish parent company Telefonica, which acquired O2 in 2005 for 17.7 billion pounds.

Vodafone has previously been tipped as the most likely recipient of the UK contract.

O2 has 18 million customers in the UK, making it the biggest mobile operator in Britain in terms of subscriber numbers, although Vodafone is bigger than O2 in terms of revenue market share.