Nokia Corporation (NOK)

[Eric]

Handset Installment Purchases in Rural India & Nokia's India Market View & Positioning

>> Nokia: to Make Handsets More Affordable in India

R. Jai Krishna
Dow Jones (New Delhi)
The Wall Street Journal
August 19, 2009

http://online.wsj.com/article/BT-CO-20090819-708322.html

Nokia Corp. (NOK) said Wednesday it is looking to make handsets more accessible and affordable in India, the world's fastest growing and second-largest telecommunications market.

Nokia's Indian unit plans to sell handsets in some rural areas under a scheme that allows the purchasers to pay in installments, the Finnish company's chief executive and president, Olli-Pekka Kallasvuo, told reporters.

Nokia, the world's largest maker of cellphones by volume, has gained popularity in emerging markets with its more affordable low-cost phones, but in recent years has been strengthening its high-end portfolio as profit margins have taken a hit.

In July, the company cut its forecast for profit margins and market share, raising concerns its number one position in the global handset market might be under threat.

However, the company sees growth opportunities in India - a market that is adding about 10 million users a month - particularly in the country's rural areas.

"There is a lot of opportunity here (in India) and we need to make mobility more accessible to all people, including those in rural areas, which is the next frontier to be conquered," Kallasvuo said.

The company has more than half the share of India's mobile handset market, according to analysts.

Nokia said it plans to roll out the installment scheme to sell its handsets in 12 Indian states after a pilot program covering more than 2,500 villages in the southern states of Andhra Pradesh and Karnataka.

Under the pilot program, a microfinance organization bought handsets from Nokia and sold them to women in rural areas by charging them INR100 for up to 25 weeks.

Nokia expects about 500 million mobile phone users in India by 2010, up from 427 million now, Kallasvuo said.

"We believe that much of this growth will take place in non-urban markets and rural penetration in India is still very low at 13%," Nokia India said in a statement Wednesday.

Apart from low-cost handsets, the market for smartphones is also rapidly growing around the world, including in India, Kallasvuo said.

"India is perceived to be a low-end market, but it is not the case. For instance, our new N-series phones and N97 and N86 are selling nicely in India," he said. "For the next generation of mobile communications, India will be critical for us in terms of innovation, manufacturing and development of new services."

Nokia has a manufacturing facility in the southern Indian city of Chennai where it has invested $250 million since its launch in 2006. The facility exports half its production to more than 59 countries, Kallasvuo said. ###

>> Nokia Sees Sales Growth in India Despite Drought

Devidutta Tripathy
Reuters (New Delhi)
August 19, 2009

http://tinyurl.com/lb8sgv

Nokia (NOK1V.HE), the world's top cellphone maker, does not expect a drought to hit its sales in India, its second-biggest market, and will expand a rural micro-finance offer for buying handsets.

Chief Executive Olli-Pekka Kallasvuo said sales of Nokia's high-end smartphones were also growing in India, the world's second-largest mobile market with around 430 million users and where nearly 60 percent of mobiles are Nokia phones.

Nokia is betting on markets such as India, where more than 10 million mobile connections are being added every month, at a time when global cellphone sales are falling as recession-hit consumers in emerging and developed markets rein in spending.

Poor monsoon rains have pushed India to the brink of drought, which could crimp consumer incomes and spending particularly in rural areas where much of the industry's growth is coming from.

Nokia executives however saw little impact on sales, saying people could use phones more as they cut spending on travel.

"We don't think the market will slow down for mobility in rural India," D. Sivakumar, managing director of Nokia's Indian unit said.

Nokia recently piloted a scheme in two states where it sold handsets on a weekly installment of 100 rupees ($2) over 25 weeks. On Wednesday, the company said it would rollout the microfinance offer in 12 Indian states.

Kallasvuo said India would remain one of Nokia's top growth markets, as 81 percent of the country's mobile users were in urban areas and they were driving demand for high-end phones.

"India is very often perceived to be a low-end market. That is not the case," he said, adding Nokia's high-end phone models such as N97 and N86 were selling nicely in the country.

In May, Nokia opened its online software and content store, named Ovi Store, hoping to follow the success of Apple Inc's (AAPL.O) App Store, and Kallasvuo said users India were among the top five in terms of downloads from the online store. ($1=48.7 rupees). ###

- Eric -