Report: Apple Inks iPhone Deals for Europe

Apple has signed its first deals with mobile phone operators to offer its iPhone in three of Europe's largest markets, ending a period of intense negotiations, according to a report in the Financial Times newspaper.

Germany's T-Mobile Deutschland, France's Orange and Britain's O2 (UK) are reported to have signed exclusive deals to sell the iPhone in their respective markets.

The operators have agreed to give Apple 10 percent of the revenue they generate from the sale of voice and data services for the device, according to the report, which cited unnamed sources. The operators hope to introduce the phone in time for the important Christmas shopping season.

Apple plans to announce the deal officially at the IFA international consumer electronics exhibition in Berlin next week, the Financial Times reported.

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The iPhone first launched in June in the United States through an exclusive partnership with AT&T. Initial reviews were positive, except for concerns about AT&T's slow Enhanced Data for GSM Evolution (EDGE) data network, and the fact that the iPhone's battery can be replaced only by returning the device to Apple. There were also activation problems during the first weekend, when thousands of customers tried to start up their phones at the same time and overwhelmed AT&T's servers.

Since then, speculation had been rife about whom Apple would partner with in Europe. Most initial reports agreed that T-Mobile and O2 would be among the partners. Some reports, citing unnamed sources, said that Vodafone Group, Europe's biggest mobile operator, had been outbid by rivals in 11th-hour talks.

Europe's splintered telecommunications market makes it harder for Apple to launch the iPhone there than in the United States. None of the big carriers covers all of Europe's most populated markets, forcing Apple to strike deals with several operators.

The iPhone could provide a boost for operators in Europe, where customers tend to choose service based on coverage and where brand loyalty is not very strong, Niek van Veen, an associate analyst at Forrester Research, said in a recent interview.

It may also help them to secure longer-term contracts with customers, who tend to favor prepaid calling plans in Europe over long-term subscriptions. That same factor could also work against the iPhone in Europe, however. Apple and AT&T require customers to sign up for a two-year contract for the device, an unusually long period.

Apple's steep demands may have made it harder for the company to reach agreements, van Veen said.

AT&T reportedly is also sharing a portion of the revenue from the iPhone. It's a new business model that Europe's operators may be reluctant to swallow, van Veen said.

"It's more than just a question of reach and what Apple wants; it's how much operators are willing to sacrifice their current [business] model for this phone," he said.

The contracts with T-Mobile, Orange and O2 were signed in recent days, according to the Financial Times. The top executives of T-Mobile and O2 campaigned for personal talks with Apple CEO Steve Jobs, the paper said.

The story appeared first in the Financial Times Deutschland (in German), and was reported later in English in the U.K. Financial Times.

(James Niccolai in Paris contributed to this report.)

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