Orange: “No iPhone price war”

Orange said it will not engage in a price war with O2 over the Apple iPhone 3G and 3G S ahead of Christmas.

Orange vice preisdent of sales and loyalty Guillaume van Gaver said: “We are aiming at being price competitive, but we are not going to start a price war over this device. We want to be competitive and we are fine tuning our offer.”

Orange refused to confirm whether the device will be available on prepay also. O2 is selling certain iPhone 3G S models for ‘free’ on 18-month contracts over £44 per month, and on 24-month contracts from £34.26 per month. All O2’s iPhone contracts include unlimited data.

The 8GB version is £342.50 on prepay, the 16GB version is £440.40 and the 32GB version is £538.30.

O2 has restructured its distribution with Apple so iPhone devices are bought and sold by the network according to more conventional handset tie-ups. Until now, O2 has agreed to cede a proportion of user data revenues, associated with usage of Apple’s own application suite, to the California company.

But new distribution deals with O2, Orange and Vodafone will see the network operators buy iPhones, subsidise them and retain all airtime revenues according to conventional distribution with manufacturers.

Mobile News understands Apple iPhone models cost the network £400-£450 typically, making the margins on them extremely slim and the ability for them to discount stock and retain profitability on sales difficult.