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India is the talk of this week's 3GSM trade show

A man talks on his mobile at the 3GSM World Congress in Barcelona on Monday. Leading companies in telecommunications, Internet and entertainment gathered for one of the world's biggest trade shows for the mobile phone industry. PHOTO: AFP

With mobile phone markets nearly saturated in the developed world, network operators and handset manufacturers are turning their attention to the fertile ground of emerging countries.

Making affordable phones and targeting consumers with smaller budgets have now become priorities for the largest companies in the sector who were all present at this week's 3GSM trade show in Barcelona.

"There are between 2.5 and 2.8 billion people who have a mobile phone: the next billion will come from the high-growth market," said David Taylor, strategy director for Motorola.

The areas representing the most opportunity are Asia, Africa and the Middle East, he said.

European telecommunications institute Idate said that the average spending per user is about 26.50 to 37.50 euros (US$34.80 to US$49.20) per month in industrialized countries, but this figure falls to about 8.20 euros in the newly targeted emerging countries.

But the network operators seem little concerned by the prospect of smaller budgets and a market characterized by pre-paid cards rather than subscriptions.

"India represents a fabulous opportunity for us," said the chief executive of Vodafone, Arun Sarin, at the 3GSM meeting.

His company agreed to pay US$11.1 billion last week for Indian operator Hutchinson Essar.

While China was the talk of Barcelona at the 3GSM conference here last year, India has stolen the show this year.

Sarin underlined the low levels of mobile phone use in India, his native country, where he said only 13 percent of the population owned a handset. This figure would rise to 40 percent in 2010, he added.

The Indian market currently includes 150 million subscribers, but 6.5 million to 7 million new users are added each month.

With an eye on the needs of emerging market consumers, Vodafone announced on Wednesday a deal with Chinese producer ZTE Corp (中興通訊) to manufacture low-cost handsets.

ZTE is to manufacture a series of low-cost phones which will be sold under the Vodafone brand name from the second quarter of this year in emerging countries.

US manufacturer Motorola won the GSM Association award for best ultra low-cost phone this week with its "Motofone" model, a sub-US$30 handset for the developing world.

"Our market research showed that in India consumers wanted a phone both cheap and aspirational in design," said Andrew Morrow, European product line manager for Motorola.

The phone is sleekly designed, but is robustly made and has a special screen that is visible in direct sunlight.

"It's an investment in the future," Morrow said. "As the market grows, they buy more and more expensive phones."

In South Africa, Motorola sold only basic mobile phones four years ago, but now 50 percent of sales are for more sophisticated models.

Analysts stressed that developing markets are extremely profitable for the companies that dare to go there.

"The average revenue per user is very low, but operators don't have a lot of commercial expenses so their margins are huge, between 35 percent and 50 percent," said Emir Halilovic, an analyst at research group IDC.
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