Spanish-owned O2 has lost a £100m a year roaming contract with video phone outfit 3.

O2 - which is now owned by Telefonica after an £18bn buyout last year - has been providing extra mobile phone coverage for 3 since the 3G service was launched in 2003.

Today, though, the Hutchison-owned mobile outfit announced it had awarded the roaming deal to Orange following an auction for the new contract. As part of the deal, there will be a transition period at the end of the year before Orange takes over completely in 2007.

3's network covers around 88 per cent of the UK population and hooks up with a roaming partner to fill the gaps. The deal with Orange, which boasts 99 per cent coverage, means that 3 punters will be able to use voice and text services almost everywhere in the UK.

Financial details of the deal were not released today although analysts have said it's worth around £100m a year. Recent reports named O2 as favourite to retain the contract.

But in a statement today, 3 said: "Orange tendered the most competitive bid for the supply of voice, text and data services and has been selected as the preferred national roaming provider for 3 from the end of 2006." ®