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Mobile operators with exclusive contracts to sell Apple's iPhone are bracing themselves for significant losses on unsold stock as they clear the shelves to make way for a new, faster version expected this summer.

O2, which sells the phone in the UK, and T-Mobile, the German distributor, are said to have significantly overestimated the number of first version iPhones that would sell in Europe.

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Kathryn Huberty, an analyst at Morgan Stanley specialising in Apple, said the losses on early model iPhones would be "significant" even though they may recoup some of this in monthly revenue from customers who bought the cheaper devices.

Ms Huberty said European mobile executives seemed to have become over-excited by the hype surrounding the iPhone at the time of its US release on the AT&T network last June.

They had since had to take steps to shift stock on which they would now make a loss in order to clear the shelves for the new 3G iPhone, which is expected to be in greater demand in Europe than in the US because of the more advanced phone networks.

On Tuesday O2 announced it was cutting the price of the iPhone by more than a third — from £269 to £169 — and two weeks ago T-Mobile made an even more drastic cut, from €399 (£319) to €99.

An O2 spokeswoman said the price cut was "not a reactive move but part of a well thought out strategy of maximising the success of the iPhone in the UK."

T-Mobile was not immediately available for comment.

With Orange, which won the contract in France, the three sold 330,000 units to the end of December, but industry sources say that European sales of the iPhone were forecast to be between 500,000 and 600,000.

Orange has yet to cut the price.

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