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Nokia confident of 3G growth
By Nicholas George in Stockholm
Published: December 20 2004 02:00 / Last updated: December 20 2004 02:00

http://news.ft.com/cms/s/4ad64784-522c-11d9-961a-00000e2511c8.html

Nokia has defended its forecast that the mobile phone market will grow by 10 per cent in 2005 and said growth could be stronger if sales of 3G handsets take off later in the year.


The Finnish group's forecast of a 10 per cent volume growth rate has been questioned by several analysts who believe the influx of new subscribers in emerging markets will slow in 2005.

But Jorma Ollila, chief executive of Nokia, said he was "confident" the figure would be reached, adding that it could be higher.

His comments come amid some significant departures from the Nokia hierarchy, including that of Matti Alahuhta, chief strategy officer, and Sari Baldauf, head of the network division.

In 2004 the handset market is estimated to have increased by more than 20 per cent to 630m-650m units. Nokia, the world's leading producer, is expected to have a global market share of more than 30 per cent.

In an interview with the Financial Times, Mr Ollila said he did not see Nokia's forecast for 2005 as aggressive. The growth would come through "a combination of emerging markets and a good and healthy replacement market".

He said: "Towards the year-end you could even see the 3G forecast as cautious, there is even some upside on 3G." In value terms growth would be "somewhat lower" but Nokia would be helped because of large numbers of new products.

In contrast, analysts at Nomura, the investment bank, are predicting handset sales growth of just 2-3 per cent and Morgan Stanley is forecasting 4 per cent.

Richard Windsor at Nomura said his forecast was due to lower levels of subscriber net additions in emerging markets such as Russia and Latin America.

"I am not convinced that you can add new subscribers as quickly as you have done this year. The only thing that could prove us wrong would be increased operator subsidies on handsets or deeper price cutting by handset producers," he said.

Mr Ollila also rebutted suggestions Nokia had been slow to get 3G handsets to the market. Vodafone, for example, features only one Nokia handset in the 10 it is using to launch its 3G services.

"We can't afford to be very late but being the first is not the issue for us," he said.

While other manufacturers might need to move early to establish credibility in the technology, Mr Ollila said that this was not an issue for Nokia. "We need to have a product that works. We need to be a credible volume player," he said.

Nokia was hit earlier this year by gaps in its product range and saw its market share fall. Since then it has clawed back market share by cutting prices and launching new phones. Nokia shares have fallen 15.8 per cent this year, underperforming its main rivals and global stock markets.