O2 Lease announced as first UK smartphone leasing service

Offers customers option to get new handset every 12-months

O2 is looking to cash in on the tech-hungry populace by offering customers a chance to have the latest handset at the cost of actual ownership

O2 has announced O2 Lease, the first smartphone leasing service available in the UK offering customers a 12-month contract where they hand the handset back at the end of the year.

By signing up to the service customers are given a brand-new handset for free, they then get 750 minutes, unlimited texts and 500MB of data as well as insurance, all for £55 per month.

While expensive, O2 is confident that the appeal of having a new handset every 12-months and the added security of insurance will entice customers away from traditional 18 and 24-month contracts.

“This is the first time a UK mobile operator has adopted a leasing model. We know that customers and small businesses are used to leasing everyday items from cars and washing machines to photocopiers and office space."

"They understand how it works and what the advantages of a leasing are. We have simply taken this idea and applied it to the smartphone market.”

While it's not yet clear which handsets will be available with the service the press release hints towards the main focus of the plan being centered around Apple's iPhone 4S with 16GB and 32GB models being mentioned.

What do you think, have O2 hit the nail on the head or is £55 just too expensive? Let us know what you think via the comments box below...