O2 yet to get first bite at UK Apple deal

By Kirstin Ridley, European Telecoms Correspondent

LONDON (Reuters) - Spanish-owned mobile phone operator O2 has yet to sign any deal to bring iPhone mobile phones -- Apple Inc.'s latest "must-have" gadget -- to Britain.

O2, which is owned by Madrid-based Telefonica, on Thursday declined to be drawn on newspaper reports that the company was poised to clinch the first European iPhone deal with Apple, the innovative U.S. consumer electronics group.

"We have not signed a deal with Apple," a spokesman said.

But the reports, some of which tipped France Telecom's Orange as close to securing a similar deal in France and which followed a German newspaper article on Wednesday that Deutsche Telekom's T-Mobile was set to win a German contract, weighed on European market leader Vodafone's shares.

Shares in Vodafone Group Plc, which jumped last week partly on hopes the group would secure an exclusive, pan-European iPhone deal, slipped by more than two percent by the close. Telefonica, Deutsche Telekom and France Telecom traded broadly flat in a weaker European telecoms market.

Some analysts noted that Apple, whose iPhones combine its hugely popular iPod digital music player, a video player and Web browser, looked set to mimic the three-country strategy it used to launch its iTunes online music store in Europe in 2004.

Steve Jobs, Apple's mercurial chief executive who helped found the company in the 1970s, has staked his reputation on the touch-screen, easy-to-use phone and music player catching the imagination of customers in the same way the iPod has.

When iPhones went on sale on June 29 in America, Apple fans braved heat and downpours to queue for days to buy what has been dubbed the "Jesus Phone" by Internet bloggers who see it as the ultimate mobile device.

TOUGH CONDITIONS?

"Although it would make a great deal of sense for Apple to go with Vodafone, it doesn't really fit with Vodafone's emphasis on their own music content and portal," said Carolina Milanesi, telecoms analyst at Gartner.

She added that Vodafone tended to take power away from mobile phone manufacturers in handset deals, while "Apple dictates conditions". Vodafone declined to comment.

O2 has stood out in the industry for playing down high-speed, third-generation (3G) services. This strategy would fit with iPhones, which look set to run over slower 2.5G networks, possibly until March 2008, analysts say.

South Africa's leading cell phone operator Vodacom is expecting to bring the iPhone to Africa's biggest economy, but a spokeswoman declined to say whether the firm had signed an exclusive deal with Apple and when it might be launched.

Vodacom is joint-owned by Vodafone and South Africa's Telkom.

Apple, which has said only that it plans to launch iPhones in Europe this year and in Asia in 2008, was playing its cards close to its chest on Thursday. "Apple is not commenting," said a spokeswoman. "There is no UK launch date."