Motorola plans for increased Indian presence

By Shailendra Bhatnagar and Unni Krishnan

NEW DELHI: Handset giant Motorola Inc. is betting on widening its market share in India by improving distribution, getting into bundling arrangements and broadening its financing deals, officials said on Tuesday.

Demand for handsets is soaring in India, the world's fastest-growing wireless services market, which added as many as 6.7 million new mobile services users in October.

"Market places like India are great volume opportunities," Allen Burnes, corporate vice president for Motorola's mobile devices business in high growth markets, told Reuters in an interview.

"There is massive industrial growth happening, and the burgeoning youth segment has disposable incomes never seen before."

Motorola ranks second behind Nokia, as it does globally, in the booming Indian market, where huge demand is coming from rural areas and smaller towns. Mobile penetration is still only 13 percent in a population of over a billion people.

Motorola has tied up with top five Indian carriers such as Bharti Airtel Ltd., Bharat Sanchar Nigam Ltd. and Hutchison Essar Ltd. to offer handsets to customers.

"Our bundled offers are mainly with first-time buyers," said Lloyd Mathias, marketing director for India. "We are getting a lot of traction in the low-end market. One of our focus areas for 2007 is building a retail presence."

Last year, Motorola tied up with local distributor Bharti Teletech Ltd. to increase its reach to around 15,000 points of sale from less than 6,000, and it now has more than 25,000.

Upward Momentum

Illinois-based Motorola had a GSM market share of 2 percent in December 2005 in India. It now stands at nearly 14 percent, according to industry data.

"Clearly we want to continue this upward momentum," Mathias said.

The $3 billion domestic handset sector has seen prices heading inexorably lower due to intense competition. Leading companies have already begun manufacturing phones in the country to cut costs and reduce time to market.

Motorola is planning to extend its interest-free financing tie-up with GE Finance Ltd. to the country's top 35 cities -- which account for 60 percent of new handsets sales -- from 10 cities now.

Over the past two years Motorola has launched a slew of handsets at many price levels, especially in the low-end segment. It is also setting up a handset-making unit in the southern city of Chennai.

Burnes, speaking on the sidelines of the global launch of the Motofone handset, added its initial sales would be primarily driven in India by bundling.

"A good proportion of volumes will be coming through India," he said. The Motofone would also be sold in the Middle East, Africa, Israel, Turkey and all of southeast and southwest Asia.

The phone sold in India offers interactive voice software in seven regional languages, as well as English, as part of the drive to expand its share of the market.

"We expect India to add 200 million subscribers over the next three years," said Burnes.

© Reuters