A gang that fraudulently purchased Apple iPhones and used them to call premium rate numbers, costing O2 £1.2m in July alone, have been arrested.

The group of nine, who are being held on suspicion of conspiracy to defraud, are thought to have set up premium rate phone numbers overseas and used fake ID to purchase contract handsets, some of which were sold-on overseas.

Meanwhile the SIM cards that came with the smartphones were used to call the premium rate numbers, some of which charged as much as £10 per minute. Telecommunication regulation in some international destinations means the UK network providers must pay the providers of a phone service before they receive money from their own customers.

As the calls were overseas, most of the mobile networks settled the bills themselves before passing the charges on to customers. However, it was only after O2 noticed the high charges that police were called in to investigate the matter.

Apple iPhone

Smartphones, SIM cards, passports, laptops and fake documents worth a total of £15,000 were seized during raids that took place in London, Southend, Walsall, Birmingham and Middlesbrough.

"We have struck at the very heart of a highly sophisticated criminal network that has been targeting the telecommunications industry to steal millions of pounds," said Detective Superintendent Bob Wishart, from the City of London Police.

"Each month more SIM cards were being used to make more phone calls to premium rate lines at more expense to the network provider."

O2 said it's committed to reducing mobile phone crime and has a dedicated team that monitors and investigates such attempted criminal activity.

"This was a sophisticated and organised attempt to defraud mobile phone operators," said Adrian Goreham from O2. "We are committed to reducing mobile phone crime and have a dedicated team that monitors and investigates such attempted criminal activity. We are extremely pleased that our own investigation and the information we have shared with the City of London Police has resulted in these arrests".