Orange dashes hopes of Christmas iPhone price war

02's rival to sell phone from next week but prices will stay high until new year

The battle for iPhone customers in the UK will be fought on the strength of the operators' networks this Christmas, after Orange announced the official launch date and tariffs. Yet analysts believe a price war is set to be unleashed next year.

Orange announced yesterday that the much-anticipated launch date of its iPhone in the UK will be next Tuesday. This breaks the two-year exclusivity held by rival O2, which has sold more than one million handsets.

The iPhone 3G will start at £30 a month, when customers sign up for a two-year contract, with the handset free. A 3GS, which is twice as fast and has longer battery life, will come free on £45 plans with a 24-month contract. The device will be sold for £184.50 at £29.36 a month on an-18 month contract. O2 offers almost the same deal.

Orange will also offer a "high-end traveller" deal, with an all-inclusive roaming and data allowance at £125 a month. There is a pay-as-you-go deal, with customers who top up by £50 able to get their hands on an iPhone for £333.

While the expected Christmas price battle has proved a damp squib, Will Draper, analyst at Execution, thinks it is just round the corner. "France Telecom will keep prices high in the run-up to Christmas to ensure they capture premium subscribers who were starved of the iPhone but were loyal to Orange," he said. "When Vodafone joins the market the gloves will come off."

Vodafone secured a deal to also sell the iPhone on the day that Orange announced that it had broken O2's stranglehold on the device in the UK. This marks a threat to O2's position as the biggest network operator in the UK. It is especially under pressure as Orange has agreed a merger with T-Mobile UK, which will put it well out in front in the market.

Tom Alexander, chief executive of Orange, said: "The excitement for the iPhone is immense," adding: "We have seem more than a quarter of a million customers register their interest on our website."

Those 250,000 who pre-registered will be at the front of the queue, and will be able to take delivery of the phone when it is released next Tuesday.

Mr Alexander reiterated previous statements that the battle with O2 in the run-up to Christmas will be on the strength of the group's 3G network. He said Orange would match its customers' enthusiasm "with a 3G mobile broadband network that covers more people in the UK than any other operator".

He added: "Earlier this year we stated our ambition to become the destination brand of choice for high-end mobile users in the UK. With the launch of the iPhone on November 10 we're pleased to be fulfilling that ambition."

Mr Draper said: "O2 has received some criticism for not investing adequately in its network to keep up with iPhone usage and a chunk of O2 customers will probably move over to Orange. However, must customers don't really care about the network. Mainly they are happy as long as they can make a call and get their data in reasonable time."

Orange now offers the phone in 28 countries and territories. In the UK it will sell the device through its retail network of 402 stores and online, as well as through the Apple store, Carphone Warehouse and Phones4U.

Carphone Warehouse said yesterday it expects to sell one million handsets in total by Christmas, and following Orange's launch. The retailer, which has 820 stores across the UK, was the only independent retailer to sell the O2 iPhone. Andrew Harrison, chief executive of Carphone Warehouse, called the iPhone a "phenomenal" handset.