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Last Updated: Thursday, 5 July 2007, 22:38 GMT 23:38 UK
O2 'to get iPhone contract in UK'
Apple iPhone
Half a million phones were sold on the first weekend in the US

Mobile phone operator O2 is reported to have won the sought-after deal to sell Apple's iPhone in the UK.

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.

However a spokesman for O2's owner, Spain's Telefonica, said that a deal had not been signed.

More than 500,000 iPhones were sold in the first weekend in the US by AT&T, which has exclusive rights there.

Vodafone, which had previously been tipped as the likely winner of the contract, saw its shares fall 2.4%.

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

The handsets are expected to be sold for about 300 and O2 will be hoping that the lure of the fashionable phone is enough to win customers from rival networks.

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