PARIS -- Network operator O2 (UK) Ltd. will sell Apple's iPhone in the U.K. from Nov. 9 for £269 (US$538), the companies announced Tuesday, marking the start of the iPhone's move into Europe.

O2 will sell the smart phone, which plays music, connects to Wi-Fi networks and has a touch-sensitive screen and 8Gbytes of memory, with contracts priced £35, £45 or £55 per month. For that price, customers will get 200 minutes of talk time, 200 text messages and "unlimited" free data transfers. They will also have free access to a network of 7,000 Wi-Fi hot spots, O2 said.

The company has a deal as the only U.K. operator to sell the phone, though it will also be available through Apple retail stores and through the independent Carphone Warehouse retail chain.

Apple launched the iPhone in the United States on June 29, exclusively with operator AT&T. The 8Gbyte iPhone initially cost $599, but Apple cut the price to $399 on Sept. 5.

At £269, the iPhone will face stiffer competition in the U.K. than it does in the United States. That's because prices for other smart phones are typically lower in Europe, where many operators subsidize the cost of new phones in order to attract customers. For instance, O2 customers signing a £30-a-month contract for 18 months or more can get Nokia's top-of-the-range N95 smart phone with Wi-Fi, camera, music player and GPS for free.

The European iPhone is substantially unchanged from the U.S. model, which had the capability to operate on the 900MHz and 1800MHz GSM bands used in Europe and Asia, in addition to the 850MHz and 1900MHz bands used in North America. Like the U.S. model, it has no 3G high-speed data capability, and will instead operate on O2's GPRS and EDGE networks.

Apple revealed a new version of the iPhone firmware, 1.1.1 on Friday with a new settings menu for international options not seen in previous versions.

Such settings will be useful as Apple moves away from English-speaking countries: Apple is widely expected to announce similar deals with operators in France and Germany over the coming weeks. France Télécom SA's mobile-and-Internet subsidiary Orange and Deutsche Telekom's subsidiary T-Mobile are the front-runners to sell the phone, according to research director Carolina Milanesi of Gartner.

The IDG News Service is a Network World affiliate.