O2 and Carphone clinch UK iPhone deal

By Kirstin Ridley and John Bowker

LONDON (Reuters) - Spanish-owned O2 UK (TEF.MC) and mobile phone retailer Carphone Warehouse (CPW.L) have clinched a long-awaited deal to bring Apple Inc's (AAPL.O) coveted iPhone handsets to Britain.

The touch-screen mobile phone, which combines Apple's popular iPod music player, a video player and Web browser, will be sold through O2, Carphone Warehouse and Apple retail and online stores for 269 pounds, including tax, from November 9.

After months of speculation, Apple on Tuesday finally confirmed what Telefonica-owned O2 called "the worst-kept secret we've had". It chose the largest British mobile phone operator, which teamed up with Europe's top independent mobile phone retailer Carphone, in a "multi-year" exclusive sales deal.

Apple's chief executive, Steve Jobs, said the phones, which have been dubbed "Jesus" phones by some Internet bloggers who see them as the ultimate device, would cost more than in the U.S. mainly because of high European taxes, but also because distribution and service costs were higher than in the U.S.

"The price is in the upper end of expectations," said Neil Mawston of research company Strategy Analytics. "For a non-3G (third generation) device in western Europe (it) is quite expensive."

Sporting his trademark jeans and black polo neck jumper, Jobs brushed off suggestions that O2 had won the UK deal because it had offered to pay the innovative U.S. consumer electronics guru the greatest share of handset sales and service revenues.

"It wasn't an economic choice," he told a London news conference. "It was a cultural choice."

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