Nokia has pulled out of a plan to launch a smartphone with No. 2 U.S. mobile provider AT&T Inc, just before the device was supposed to be announced, a person familiar with the matter said.

The touchscreen phone, which was to be called the X7, could have helped Nokia's efforts to gain ground in North America where it has struggled to compete with rivals such as Apple Inc, Research in Motion and Motorola Mobility.

This was Nokia's decision, said the person who asked not to be named because the companies have not made a public announcement.

AT&T would have been likely to announce the phone fairly soon, the person said.

The cancellation was first reported in the Wall Street Journal which said that the companies had been planning on making an announcement ahead of Mobile World Congress, a wireless trade show scheduled to take place next month in Spain.

AT&T declined comment and a Nokia representative was not immediately available.

Since it is about to lose its exclusive U.S. rights to sell the iPhone, AT&T has been working to expand its phone line up with smartphones from multiple vendors.

(Reporting by Sinead Carew; editing by Phil Berlowitz)

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