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O2 UK Loses iPhone Monopoly

Michelle Donegan
LR Mobile News Analysis
Michelle Donegan
9/28/2009

Telefónica UK Ltd. 's two-year exclusive U.K. partnership with Apple Inc. (Nasdaq: AAPL) is officially over as Orange UK revealed today that it will start selling the iconic iPhone later this year.

Orange announced that it will offer the 3G and 3GS iPhones in the U.K. this year and that it now sells the devices in 28 countries worldwide. But the carrier did not release any details about iPhone prices, service packages, or even when the device will be available in the U.K. Potential customers can register their interest here on Orange's Website.

O2, which suffered data network outages over the summer, has sold more than 1 million iPhones as of February 2009, which is the latest figure the carrier has released, since it first started offering the devices in November 2007. (See O2 UK Data Network Down, iPhone Invades UK, iPhone UK Launch: Jobs Has 'Upset Girlfriends', and Slideshow: iPhone Hits London .)

For Orange, the iPhone could bring a much needed boost to its U.K. business, which has been flagging lately. The carrier is the third largest operator in the U.K. by subscribers, after O2 and Vodafone UK , with 17 million customers, of which 15.9 are active mobile subscribers and more than 1 million are fixed broadband subscribers. Orange UK revenues in the first half of 2009 fell 2.6 percent to €2.5 billion (US$3.6 billion), compared with the same period last year, which the carrier mainly attributed to worsening economic conditions and regulatory decisions.

While it is growing its mobile broadband customer base (up 76 percent in the first half of this year with a total to 4.3 million), Orange UK is losing fixed broadband customers dramatically. Its ADSL customer base shrunk by 10.3 percent in the first half of this year, compared with the same period last year, and Orange's fixed broadband revenues fell by nearly 17 percent to €120 million ($176 million), compared with last year.

In addition to taking away O2's iPhone exclusivity, Orange is about to knock O2 from its top spot in U.K. market share. Orange is now in the process of blending its U.K. operations with T-Mobile (UK) in a 50-50 joint venture, which would create the largest mobile operator in the country. (See Battle for T-Mobile UK Heats Up and T-Mobile, Orange Join Forces in UK.)

— Michelle Donegan, European Editor, Unstrung

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