Vodafone will not be able to sell iPhones by Christmas, shares slip

Barely a day after UK-based mobile operator Orange announced its decision to sell Apple Inc.'s iconic iPhone in the UK after the latter terminated its exclusive 2-year deal with rival mobile operator O2, Vodafone, refusing to be sidelined, threw its hat in the ring, Tuesday, saying it too will start selling the must-wanted handset.

With Vodafone in the fray, people were expecting a bitter price war during Christmas, the country's most important festive season, as all three operators will try to woo customers by offering price cuts and shorter contracts than those presently being offered by O2.

The handset - which is sold in Apple and O2 stores and in Carphone Warehouse, the high street mobile chain - is currently available free on some O2 contracts but customers are still required to "lock-in" for 18 or 24 months and to pay up to £74 a month for calls and texts. On the other hand, pay-as-you-go customers have to shell out £538 for a 32GB model or £440 for a 16GB model.

However, market watchers said many will be left disappointed as unlike Orange or O2, Vodafone's deal with Apple bans it from stocking or selling the handsets in 2009.

"Vodafone and Apple today confirmed that they have reached agreement to bring iPhone 3G and iPhone 3GS to the UK and Ireland in early 2010," the company said in a statement.

In other words, during Christmas season, unlike Orange, which is banking on iPhone to spur its sales, and O2, which will "exclusively" be selling the much-awaited Palm Pre (touted as an "iPhone killer") besides the iPhone, Vodafone will have nothing new or exciting to offer and hence will be worst hit in terms of sales, analysts said, adding that the restriction on the Vodafone deal, which was signed late last night, has only come as a blow to the group, which CEO Vittorio Colao said recently, had lost 159,000 customers in its latest quarter for losing out on the initial deal to sell the gadget.

Though the company said it will allow people to prep-register for the product, analysts also remained sceptical about the response it would get. "Vodafone tells us it will allow people to pre-register - but I don't think an iPhoneOU under the Xmas tree will cut the mustard," said Mark James, an analyst with Evolution Securities.

Not surprisingly, the news has sent shares of Vodafone Group Plc plunging 1.94 down at GBP141.65 (11.53AM BST) at the London Stock Exchange on Tuesday.

Of the other UK operators, T-Mobile has said it has no plans to offer the iPhone while three have not indicated their intentions regarding the handset.