Nokia, the world's top mobile phone maker, said on Wednesday it plans to invest in a new handset plant in India to meet booming demand in the world's fastest-growing major wireless market.
The Finnish firm said it and its key suppliers would invest between $100 and $150 million over four years in India.
"The factory would be an integral part of our global manufacturing network and help fulfil growing demand as mobile communications become increasingly affordable," Nokia President Pekka Ala-Pietila said in a statement.
India is home to more than 45 million mobile users, a number widely expected to double next year as some of the world's lowest call rates, at less than two U.S. cents a minute, lure millions of new users each month.
India has become attractive for global handset and telecoms equipment makers as phone ownership rates are abysmally low by western standards. Only four in 100 Indians own a mobile phone.
More than 37 million handsets are likely to be sold in India in 2005, with the annual number rising to 50 million by 2008.
Mobile phones are no longer considered a luxury in India as decreasing costs of handsets and services boost ownership, even among the low earners who are driving much of the growth.
Nokia's Indian plant is a further step to keep its costs in check as it seeks to regain lost market share from rivals like Samsung Electronics Co. Ltd..
Industry sources, quoting research firm Gartner, said Nokia's global market share fell to 30.9 percent in the third quarter from 34 percent a year ago, though its share rose by more than a percentage point versus the second quarter thanks in part to cost cuts on selected phone models.
Ala-Pietila told reporters he expected manufacturing in India to "start towards the end of 2005 or early 2006."
Holding the lead
Nokia is the leader in India's $2.5 billion handset market, widely believed to have about 45 percent market share, though no precise estimates are available. Other players include Samsung, LG Electronics Inc. and U.S. major Motorola.
Nokia's move follows plans by Samsung and LG to also set up plants in India, seeking to tap the demand of millions of people buying phones, many for the first time.
Samsung's investment plans are not known, but LG will plough $60 million into a mobile phone plant that will make 20 million GSM and CDMA phones annually by 2010.
A Nokia official said its plant, the company's 10th handset manufacturing site, would focus on the Indian market and make a range of phones from cheaper entry-level designs to selected upper-end models.
The proposed plant, whose capacity was not announced, will employ about 2,000 workers.
Separately, handheld computer maker palmOne Inc. staked its claim for a piece of the Indian market by launching its popular Treo device in the country.
California-based palmOne has priced the Treo 600 smartphone at 27,499 rupees ($618) to compete with rival Research In Motion Ltd.'s BlackBerry e-mail device, available for between 19,000 and 33,000 rupees. Along with the Treo, palmOne will sell its Tungsten T5 handheld for 22,999 rupees.
"The market is just right now," Kartik Ramaswamy, country manager for palmOne in India, said. "There is now a significant amount of high-end services that have gained popularity here."
By: N. Peter Kramer
