The blue lights at the O2 arena may have clinched the network's exclusive deal with Apple for UK iPhone distribution, according to a report in the Daily Telegraph.

An extensive interview with O2 UK chief executive Matthew Key unravels the story of the deal, beginning with an 8am phone call on a Saturday, when Key was woken up by Telfonica boss, Peter Erskine.

"We’ve had a call from Apple,’ said Erskine. "They want us to be in Cupertino in California on Tuesday." Key bought the tickets, and arrived at Apple's headquarters the following Tuesday morning for a meeting with Apple CEO Steve Jobs and his senior team.

”He’s a hugely impressive guy, hugely impressive guy,” said Key. ”Jobs clearly knows his stuff at a level of detail that for someone at that level is mindblowing, and he has a great incisiveness in terms of what the customer wants and needs in products.”

Key took a few moments of actually using an iPhone to realise the device was "leagues above anything I've ever seen before," and realised he had to carry the device on his network.

The deal was finalised in the UK the following Saturday, somewhat prosaically over "Marks & Spencer's sandwiches".

But the blue lights in the white sofas in the O2 Arena's VIP lounge were also catalysts to the deal's success.

When Apple's executives visited the venue for another iPhone meeting, it was the blue lightbulbs in the white sofas of the VIP lounge that most impressed them, according to the report.

"We were in the bar talking about how many iterations of this blue bulb we went through to get the colour just right for our brand," laughs Key. "And they said later that they realised then just how passionate we are, like them, about our brand in terms of obsessive attention to detail."

The Telegraph report also sees Key utterly reject recent reports that O2 signed a "madly money-losing" deal for the device, agreeing to hand Apple 40 per cent of revenue. "It's sour grapes," he said, "we don't do bad deals".

Key expects 75 per cent of iPhone customers to come from other networks. He also expects to sell a "couple of hundred thousand" in the first two months.

Key also expressed confidence his network will secure distribution rights to the 3G version of the iPhone, "which is due in the second half of next year".

O2 is adding 1,400 customer support staff in preparation for the iPhone launch.