Apple has commenced discussions with Australian mobile networks as it searches for the right partner for the iPhone in the country.

Reports this morning claim the company is in talks with Australia's Telstra, which has begun testing the product with a view to launching the handset in Australia next year, when Apple plans to widen the iPhone's reach.

Telstra CEO Sol Trujillo confirmed the moves in talks with Sydney's Daily Telegraph, but warned no final decision has been made.

Apple would have to produce an iPhone compatible with Telstra's Next G network, which operates at 850 megaHertz frequency and needs specialized handsets, Trujillo said.