30,000 O2 iPhones at risk of return

Recent purchasers to wait for best deals

UK iPhone carrier O2 is bracing itself for thousands of returns as recent customers send back their iPhones to wait for better deals from rivals Orange and Vodafone.

A report in The Telegraph estimates that about 30,000 customers have bought the iPhone from O2 within the last two weeks, and are therefore entitled to end their contracts.

O2 said the company is not planning to offer such users a better deal in order to convince them not to cancel their contract.

O2 customers with iPhone 3G handsets are already waiting out the end of their long contracts, and will join the others in a search for the cheapest iPhone 3GS deals.

On Monday Orange confirmed it will stock the handset as O2's exclusive two-year deal with Apple to offer the iPhone has expired. The announcement follows months of speculation as to whether other UK networks would be able stock the handset. Vodafone quickly followed in the footsteps of Orange after it revealed yesterday that it will also sell the Apple iPhone in the UK. O2 responded yesterday stating its continuing relationship with Apple, but also promoting the rival Palm Pre - for which it has UK exclusivity.

Opening up the iPhone to three network operators is expected to knock about £5 a month of the contract tariff, says The Telegraph. That would cut the overall cost of the iPhone by about £100 over two years.

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Orange is expected to start selling the phone in November, but Vodafone will be restricted from selling the phone until the start of next year.

O2, Orange or Vodafone: which is best for iPhone?

"There will be a price war," said Steven Hartley, analyst at technology research house Ovum.

"Research shows that in every country where there is more than one operator selling it, it is cheaper.

"It could be very disruptive, but it depends how Orange play it. If they get really aggressive O2 will have to respond and a full-on price war could start."

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