02 'giving Apple cut of iPhone revenues'

But hackers are already putting that expensive exclusivity under threat

02 is reported to be giving Apple a share of revenues earned from the iPhone to gain exclusive rights to the device for the Christmas market.

Vodaphone, which had been bidding heavily for a deal, apparently baulked at the terms, according to The Times.

02, now owned by Spain's Telefónica, evidently hopes that the new gadget will help it retain or gain subscribers in a ferociously competitive market.

Carphone Warehouse is reported to be angling for rights to sell the iPhone after 02 exclusive deal times out.

However, hackers are already challenging that exclusivity. One has already posted a way to crack the iPhone activation code and others are predicting the phone will be unblocked by the end of the week, allowing it to be used on other networks.