Reports: O2 wins Apple iPhone contract in UK

“Mobile phone operator O2 is reported to have won the sought-after deal to sell Apple’s iPhone in the UK,” BBC News reports.

“Press reports said that O2 is set to sign an exclusive contract shortly and should have the new phones on sale in time for Christmas,” The Beeb reports.

“The agreement with O2 is reported to include Apple receiving a continuing share of the revenue generated for the network operator,” The Beeb reports.

Full article here.

Elizabeth Judge reports for The Times, “O2 has beaten its rivals to win the exclusive UK rights to offer Apple’s iPhone. The tie-up, the mobile phone industry’s most sought-after deal in years, marks a major coup for the 18 million-customer group. The final contract is expected to be signed imminently.”

“The deal will come as a bitter disappointment to Vodafone, which had been tipped as the front-runner for the deal,” Judge reports.

“Arun Sarin, Vodafone’s chief executive, had been pushing hard to secure a deal for the iPhone, which has been at the centre of one of the most fiercely contested mobile battles since the £22.5 billion auction of 3G rights,” Judge reports. “However, as negotiations reached a climax, he is thought to have decided that the commercial terms on offer were not viable.”

Judge reports, “Apple’s agreement with O2 is thought to include a continuing share of the revenues generated by each iPhone customer. O2 ’s network will also have to be specially configured to accommodate the Apple handset. The lure of the Apple brand is expected to lead thousands of UK mobile customers to ditch their existing contracts and switch to the iPhone provider.”

Full article here.

[Thanks to MacDailyNews Reader “Hugh” for the heads up.]


  1. I love the additional on going revenue stream action for AAPL.

    They have several rumored low overhead streams now:
    – Made for iPod / iPhone (10% royalty on accessories)
    – AT&T new customer signups ($100 for each account not an AT&T customer)
    – Piece of AT&T and O2 monthly rate plans

    This is great because the more Apple can make off of the ecosystems they create, the mroe viable the ecosystems are and the more likely they are to remain self sufficient (unlike, say, the Zune).

  2. I’m a stockholder but I don’t think I like the idea of getting revenue from the operator. That’s probably what is responsible for the 2 year commitment and the fact that the iPhones are bricks until activated.

  3. @@me,

    I’m a stockholder too, and I don’t think I like the idea of AAPL going to 165 by year’s end thanks in part to all of these European carrier agreements.

    That said, are you an idiot? How can recurring revenue streams be a bad thing, even if they originate with “the operator”?

    Oh, I know. The earth is flat, so . . . .

  4. @ @me, The idea of getting revenue from the carrier has nothing to do with the length of the contract offered, this is the model that has existed in the US, you will no doubt see later on different models openning up around the World depending on the existing models there.

    What it does though is change the operating model of the carriers, who in the past denied their customers the opportunies provided by new technologies. Eg the crippling cost of data downloads is no more, Wi-fi is now available at no cost which means free internet calls.

    If the carrier is to be compensated for loosing out those unfair money making schemes, then it is only fair that they have you as a commited customer over a period of time that will help them plan and deliver the services you need.

    As a stockholder you should be pleased, just as a patient you are pleased to be treated by your hospital even though you have to pay for the treatment through your nose.

  5. One question: if it is okay for Apple to demand a continuing revenue stream from AT&T and other cell phone subscriptions, why is NOT okay for Universal or other music labels to demand revenue from the iPod?

  6. @OPJ
    The record companies have nothing to do with the ipod, they didnt invent it, they didnt design it, nothing, on the other hand you have Apple who designed the iphone and its one of the key reasons why customers are switching to AT&T. People have bought and are still buying iPods because they want an iPod, not because they get access to the iTunes music store. The statistics show that by far the majority of music on peoples iPods are NOT from the iTunes music store.
    Would people still buy iPods if they couldn’t buys songs from the iTunes music store? I don’t believe it would be a deciding factor. There would possibly be a 1 or 2% drop in sales.
    Would all the people that have signed up for a new AT&T contract have done so without the iPhones release? probably not.

    Its Apple that are fusing this amazing hardware and software together. In a way that makes it so desirable to people. AT&T are getting business from Apples product. The record companies are basically vultures who don’t create a single thing, and act as pimps for the artists who don’t have the financial ability to get their art to the people, its actually Apple through the iTunes music store that is allowing people to have access to the music labels signed artists in a way that was previously not possible.

  7. re: I’m a stockholder but I don’t think I like the idea of getting revenue from the operator. That’s probably what is responsible for the 2 year commitment and the fact that the iPhones are bricks until activated.

    I would like to point out that ALL PHONES ARE BRICKS until activated.

    This is not unique to iPhones!

  8. Razor, Apple didn’t invent the cell phone, didn’t build entire cell phone networks, and, more to the point, once you have an iPhone in your hand Apple’s contribution has pretty much ended.

    The argument has been similar with the record labels–hey, when someone buys the track/album/cd/whatever you got paid, what right do you have for continuing revenue?

    Let’s not forget, the continuing fee Apple receives isn’t paid by AT&T–it is paid by us with AT&T as the middleman. If I’m stuck paying Apple for existing just for the privilege of using a phone I already paid for then what is the difference if I’m also stuck paying the music labels for music I already paid for.

    In fact, I’d be delighted to see part of the cost of the iPod go to the music labels if, in return, iPod users were held no longer responsible in RIAA suits because they paid for the music as part of the cost of the iPod.

    (I would love to see Steve make that offer to the music labels. That would be f’ing classic–hey, labels, no prob. We’ll give you 5% of the cost of each iPod and in return we convert iTMS into a giant bittorrent tracker that all iPod users are free to use as part of the cost of their iPods.)

  9. @OPJ
    I’m not totally decided that Apple should get an ongoing slice of the action, having said that, also the prices AT&T have given for their plans don’t indicate that the end user is having to pay anymore for the service than they would for any other phone.
    In addition Apple has also made it clear that they intend to upgrade the iPhone periodically.
    Apple may not have invented the phone, but they have re-invented it.

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