O2 is to launch a cheap smartphone with the intention of winning market share at the lower end of the market.
The mobile operator will offer the HTC Smart from April in an exclusive deal with the Taiwanese manufacturer.
The HTC Smart is aimed at regular users of social networking sites. It features a variety of customisable widgets for quick access to contacts, photos and music.
"We believe this is a key move to bring smartphones to a far wider cross-section of the population," said Matthew Key, chief executive of Telefonica Europe, O2's parent company, in a statement.
"The benefits of web browsing on the move and ability to experience applications like mobile social networking will now be brought to the mass market."
Pricing is yet to be disclosed.
Demand is booming for smartphones as consumers seek more powerful handset features and applications. Competition in the market will become fierce this year, according to analysts, leading to lower prices.
HTC took a battering in its latest results, with profits dropping 31 per cent year-on-year in Q4 2009. However, it expects revenue growth to return in the first quarter of 2010.
The handset manufacturer has already announced two handsets this week, the HTC Desire and HTC Legend, which will both be based on Google's Android platform.
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