Asia Pacific to fuel Nokia growth

Asia Pacific to fuel Nokia growth

Jessica Tab, Dow Jones, Singapore

Nokia Corp.(NOK) expects about half of the mobile-phone market's growth over the next five years to come from the Asia- Pacific region, mainly helped by emerging markets like India, China, Indonesia and Vietnam, said a senior company executive.

"From now till 2010, about 50 percent of new subscribers will come from Asia Pacific including China," Urpo Karjalainen, Nokia's senior vice president of customer and market operations in Asia Pacific, told Dow Jones Newswires on Monday on the sidelines of a product launch in Singapore.

The Nokia Connection 2005 showcase opened a day ahead of CommunicAsia2005, an annual communication and IT trade fair.

Nokia, which is the world's No. 1 mobile-phone maker in terms of handset shipments, expects the global mobile subscriber base to reach three billion by 2010, compared with 1.7 billion last year, Karjalainen said.

"There's a huge number of new subscribers coming from the Asian market. In Asia Pacific, it's mainly India, Vietnam and Indonesia that are the biggest targets," he added. He didn't elaborate.

According to IDC Asia/Pacific, a telecom and IT research firm, mobile services revenue in India is expected to more than triple to US$12.5 billion in 2009, compared with $3.7 billion in 2004.

Karjalainen later told a media conference that he sees "India as a huge growing opportunity" due to its low penetration rate of about 6 percent . The global penetration rate is currently at about 28 percent, Nokia said.

"If you look down the road in a few years time, it will become the No. 2 market (after China) in the world in terms of subscribers," he said.

In China, Nokia claimed the No. 1 spot from rival Motorola Inc. (MOT) last year, capturing a 19.7 percent market share, up from 15 percent in the previous year. About 64 million handsets were sold in China in 2004, representing 12 percent of total global sales, according to research firm Gartner.

"China is also significant in terms of new subscribers ... we're No. 1 in there. In the last few quarters, we've been extending our lead there," he said.

Nokia recently revised upward its handset market volume for the year to 740 million units from a previous forecast of 720 million units, Karjalainen said. He declined disclose the number of units the company expects to ship to Asia Pacific during the year.

During the first quarter of the year, Nokia's handset sales volume in Asia Pacific, excluding China, rose 44 percent to 10.6 million units, from 7.4 million units in the year-earlier quarter, while volume to North America fell 33 percent to 4.3 million units from 6.5 million units. Sales volume in Europe, the Middle East and Africa rose 27 percent for the first quarter to 27.4 million units from 21.6 million units a year earlier.

He added that affordable pricing would entail offering "suitable handsets for those markets."

The company recently launched two new handsets, the Nokia 1110 and Nokia 1600, which are geared toward fast growing emerging markets.

"A number of things affect retail pricing ... it's not just our cost of phones ... There are other factors like services bundling and the air time ... the retail margin and so forth," he said.

The retail price of a handset in an emerging market like India would be about US$60, he added.

"It's really about getting the right price points for the entry-level phone segment...I would expect that there's going to be a slight decrease in the lowest-end of the handset market," he said.

At the two-day showcase launched on Monday, Nokia unveiled seven new handsets including the Nokia 6280, Nokia 6111 and the Nokia 6270.

The 6280 model is the eighth 3G-enabled Nokia handset launched this year.

"For 3G, outside of South Korea and Japan in the Asia Pacific...(the technology is) not really there yet because the networks have largely not been launched," Karjalainen said. "This year and next year will be crucial (for 3G in Asia Pacific)," he said, adding that Nokia is well positioned in this market.

He noted that 25 percent of Nokia's line of 40 new handsets for the Asia-Pacific region this year will be 3G-enabled, compared with about 5 percent to 10 percent last year. Nokia has launched 22 new handsets in the region so far this year.