TEF - Get Report) U.K. unit O2 was close to signing an exclusive deal to sell iPhones abroad. The Financial Times, citing people familiar with the situation, reported that O2 would be the first European telco to offer the heavily hyped phone. Investors had been jazzed about the success of iPhone sales in the U.S. since the device's launch Friday. The exact size of that success, though, is still being determined. Hopes of an immediate sellout of 1 million units were
dashed, but the milestone appears to be looming this week. In order for the iPhone juggernaut to keep rolling through the upcoming holiday buying season, however, analysts and investors say other markets have to be conquered. "Europe is the key to Apple hitting its official 10 million target," says one industry observer who has been closely watching the overseas effort. Apple has said it expects to sell 10 million iPhones by the end of 2008. Analysts say Apple would likely demand the same terms from an overseas carrier that it got from AT&T ( T - Get Report) in the U.S. -- and that could be a problem for some European carriers.
Verizon Wireless -- jointly owned by Verizon ( VZ - Get Report) and Vodafone ( VOD) --
said no to Apple. But AT&T was willing to go along with Apple's two-pronged revenue-sharing arrangement. AT&T gives Apple a commission for each new customer and a cut of the customer's monthly payments. Vodafone looks to be the biggest player to get shut out of the European iPhone deal. "Probably," says one analyst, "because they didn't want to budge on the conditions." France Telecom's ( FTE) Orange unit and Deutsche Telekom's ( DT) T-Mobile are expected to get the iPhone deal for France and Germany, according to industry watchers. Shares of Apple recently were up $3.65 to $130.82, flying by the 52-week high of $127.61 set in early June.