O2 Announcing UK iPhone Deal Tomorrow

According to The Guardian, O2 has become the exclusive iPhone carrier for the UK. The last minute deal comes at a hefty price to UK carrier O2 which has agreed to give Apple up to 40% of the revenues made. At a further loss to the carrier, a portion of the sales revenues will be given to retailer Carphone Warehouse. Apple believes that O2 does not possess a great enough retail presence to distribute the iPhone on its own.

In the months since the iPhone was announced in January, T-Mobile, Vodaphone, Orange, and O2 were all considered for the deal. The Guardian believes that T-Mobile has won the rights for distribution in Germany, and an announcement will come on Wednesday. The same goes for Orange in France, which will be confirmed on Thursday.

Initially, Apple had planned for both Orange and T-Mobile to share the UK rights. At the last minute, however, O2 approached Apple with a deal they could not turn down. The agreement reportedly gives Apple such a high share of revenues that no other carrier would consider countering the offer.

"...none of its competitors could see any way of making any return on the phone, even over three years. They believed that even if it was treated as purely a loss-leading marketing product, a better return could be had by spending the money elsewhere."

O2 will now be faced with the task of upgrading their network to support EDGE, the data technology which iPhone relies upon for Internet access outside of Wi-Fi networks.

All four carriers have refused to comment.