Matthew Key, chief executive of O2 Europe, hinted that the much-awaited next generation version of the iPhone is about to be launched in the UK.

He said Telefonica O2, which has an exclusive network deal for Apple’s iPhone in the UK and Ireland, would make a joint announcement with Apple in “the coming weeks.”

Although Mr Key would not be drawn on whether it would be about a 3G version of the popular handset, he pointed out O2 has already sold out of the basic 8GB version of the current model.

Speculation is mounting that Apple will reveal the 3G version of the phone at its Worldwide Developers' Conference in San Francisco, which starts on June 9.

Bucking the general downturn in consumer spending, mobile phone network O2 saw revenue increase by 12.6 per cent in the UK in the first quarter, fuelled by a 250 per cent increase in contract additions.

O2 UK, which is owned by Spain’s Telefonica, added more than 206,000 contract customers in the first three months of the year - its best ever first quarter.

The rise was driven by the popularity of the iPhone at the top end of the market and its low-cost Simplicity contract at the lower end, the company said.

Matthew Key, chief executive of O2 Europe, said he had seen “no evidence of significant change in our customers’ spend or usage”.

The company lost 185,000 pre-paid customers, partly due to customers moving from pre-paid to post-paid contracts as well as the usual disconnections following the Christmas period.

However, despite this, the average revenue per user (ARPU) for prepaid customers went up from £11.40 to £12.30 per month.

ARPU for contract customers remained flat at £42.40 compared to the first quarter last year.

O2’s total number of customers now stands at 18.4 million, up 21,000 on the last quarter.

Thanks to the iPhone, O2 is seeing more people surfing the internet and emailing from their mobiles than ever before.

Revenue from mobile internet use shot up 55 per cent in the first quarter this year, compared with the same period in 2007.

However, in terms of impact on overall revenue mobile internet use is small, at just £1.48 of a total average voice and non-voice ARPU of £23.60, partly due to unlimited data bundles on iPhone contracts.

Email and websites such as YouTube are driving the use of the internet on mobile handsets, ahead of downloads of music tracks and film clips, according to the network provider. GPS navigation is also taking off.

Text messages still dominate non-voice revenue. In the last quarter 6.8 billion texts sent by O2’s UK 18.4 million customers in the last three months – equivalent to four texts per user per day - a 33 per cent rise on the same time last year.

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