Optus offers best iPhone value- Citi

Optus offers the best value and most flexible deals for Apple's 3G iPhone, which will go on sale on Friday, analysts at a major bank say.

Optus, the nation's second biggest telecommunications provider, is offering the iphone at no upfront cost on a $79 cap plan for 24 months, or for a monthly fee on cheaper plans.

By contrast, Vodafone will charge customers an upfront fee for the handset, while Telstra Corporation Ltd's call and data limits will be much lower than its rivals, Citi analysts Tim Smeallie and Phil Campbell said in a note to clients.

"Optus's pricing ... signals a real change in strategy, becoming a price leader and also offering very high levels of subsidy," Mr Smeallie told AAP.

Mr Smeallie said the iPhone, for which there is huge demand, could be the catalyst for increased usage of 3G, or third-generation mobile services, on mobile phones.

He said this would boost revenue for the industry as a whole.

Until now, consumers had mostly used the 3G capabilities of the network through mobile broadband services on their computer.

Optus, owned by Singapore Telecommunications Ltd, is offering iPhone customers $550 worth of calls and 700 Megabytes (Mb) of data each month on the $79 plan.

Calls are charged at 35 cents per half minute with 35 cents of flagfall.

"We're struggling to understand the payback for Optus in 24 months," Mr Smeallie said.

According to Mr Smeallie's note, Optus chief executive Paul O'Sullivan had said competition in the mobile phone market would intensify.

Vodafone, the world's biggest mobile service provider, will offer the handset on a $69 plan but with an additional one-off charge of $189.

Australia's biggest telco, Telstra, won't have an upfront charge for the iPhone on its $80 plan but will include $70 of calls and 5 Mb of data.

Mr Smeallie said Telstra's plan was voice centric and suggested a strategy of protecting its own web content by limiting the amount of data customers could access from other sites.

Telstra charged a premium for its service, but customers would not consider switching away from the telco until the premium reached 27 per cent, he said.

Vodafone's $69 plan will include $350 of calls, at 35 cents per half minute and 25 cents flagfall, and 250 Mb of data per month.

Mr Smeallie and Mr Campbell said data usage on the iPhone may not be as high as expected because customers would not be able to download iTunes from the mobile network.

He said this raised the possibility that the large download quotas may be more for making headlines.

The fourth biggest mobile service provider Hutchison Telecommunications Ltd hasn't said whether it will sell the iPhone.

However, analysts noted the company sold the Nokia N95 8Gb which offers similar capabilities to Apple's handset.

Hutchison, which provides mobile services under the 3 brand, sells the N95 on a $49 cap plan with no upfront charge and that would be a viable alternative to the iPhone, the analysts said.

SingTel shares fell five cents, or 1.84 per cent, to $2.67, Telstra lost three cents, or 0.67 per cent, to $4.42 and Hutchison declined 0.2 cent to 9.8 cents as of 1421 AEST.