The UK’s smallest network 3 UK will sell Nokia’s N95 Comes With Music handset with a monthly contract starting next month, Reuters reports, citing an industry source. We’ve just confirmed with our own source within 3 that the deal has been done.

The tie-up between 3 and Nokia (NYSE: NOK) makes sense. Nokia has struggled to get the country’s big four operators—Vodafone (NYSE: VOD), O2, T-Mobile and Orange—to offer its CWM handsets, and the ambitious service debuts Thursday with only a prepaid offer for the 5310 Xpress Music phone through an “exclusive” with Carphone Warehouse (is it an exclusive if no one else wants the deal?). The service would obviously get more traction if it got the distribution through the carriers, especially if it were offered though a monthly contract with a handset subsidy, but the operators are reportedly wary of CWM cannibalizing their own music offerings. Hutchison Whampoa-owned 3, however, would be more willing to take the chance to see if the handset could lure more subscribers. UK regulator Ofcom estimates that 3 has four million subscribers, while Orange, the UK’s fourth largest network has nearly four times as many. Both Nokia and Three have declined to comment on the story.

• @ EconMusic: Nokia Distances Itself From ‘Free Music’ Claims