India has become the focal point for many telecom bigwigs. In the past two years, several companies including Vodafone have strengthened their focus enhancing investments, as India adds 6-7 mn subscribers a month. With saturation-ridden Western markets showing slow growth, India and emerging markets are becoming the sought-after locations for them. Having realized that the return on investments from Indian operations is sufficient, these companies have made India the hub for their entire Asia Pacific region, while some are planning to make India their global production base.

The Growth Path
Though India has overtaken China in terms of net subscriber additions in a month, India is way behind in mobile handset sales primarily because of its thriving replacement market.

And this is the reason why India could only become Nokia's second largest market, and China the largest. But, market estimates suggest that India could become Nokia's top market shortly-not really a surprise for telecom operators in India who are confident of achieving the 500 mn subscriber mark by 2010-11. According to an iSuppli research, around 70 mn handsets were sold in India in 2006. Around 90 mn handsets may be sold in 2007, while the target for 2011 is around 150 mn. The industry also sees scope for a replacement market soon going by the stunning growth India witnessed in telecom in the last 2-3 years.

According to VOICE&DATA estimates, Nokia India garnered Rs 11,486 crore in FY '07 from the handset business, growing 45.5% over the previous fiscal. Also, Nokia and Siemens (now a combined entity) recorded Rs 4,405 crore and Rs 585 crore, respectively, from the wireless infrastructure business in FY '06.

Performing Well
Following the stunning performance, India has become the second largest market for Nokia in terms of sales, going past the US for the quarter ended June 2007. Nokia is already the #1 multinational company operating in India in terms of turnover.

The recent visit of Olli-Pekka Kallasvuo, president and CEO of Nokia, commemorates this announcement.

"India is playing an increasingly key role in the global economy buoyed by impressive economic growth, skilled manpower, and tremendous business opportunity," says Kallasvuo.

Over the last three years, India has been gaining significant ground y-o-y moving from the #4 position in 2005 to #3 position in 2006, and is today poised right behind China, Kallasvuo adds.

Stepping Up
Nokia is keen to step up its investments and manpower, though Kallasvuo declined to comment. Nokia's manpower base has already gone up to 9,000 from 450 in 2004. The company's Sriperumbudur, Chennai factory currently employs 4,700 people, 70% of who are women. The Nokia Telecom Park has received an investment of $500 mn.

Nokia Siemens Networks has recently announced its plans to inject $100 mn in India over the next three years in a bid to develop a strong telecommunications environment.

With Indian operators aiming at investing close to Rs 60,000 crore during the current fiscal to expand their wireless reach, Nokia Siemens' proposed investment will reap benefits soon and will make India their key market.

Another key announcement from Nokia during Olli-Pekka's visit was regarding exports. It has started exporting to fifty-eight countries from its manufacturing plant which reached production volumes of 60 mn handsets (August 2007) and is exporting half of its production to fifty-eight countries across the Middle East, Africa, Asia, Australia, and New Zealand. Recently, Pakistan discontinued exports of Indian made Nokia handsets from India.

Baburajan K
baburajank@cybermedia.co.in

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