Nokia defends strong forecast for mobile market

Nokia has defended its forecast that the global mobile phone market will grow by 10 per cent in 2005 and claimed that growth …

Nokia has defended its forecast that the global mobile phone market will grow by 10 per cent in 2005 and claimed that growth could be stronger if sales of 3G handsets take off later in the year.

The Finnish group's forecast of a 10 per cent volume growth rate has been questioned by several analysts who believe the influx of new subscribers in emerging markets will slow in 2005.

But Mr Jorma Ollila, chief executive of Nokia, said he was "confident" the figure would be reached, adding that it could be higher.

His comments come amid some significant departures from the Nokia hierarchy, including that of Mr Matti Alahuhta, chief strategy officer, and Mr Sari Baldauf, head of the network division.

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In 2004 the handset market is estimated to have increased by more than 20 per cent to 630-650 million units. Nokia, the world's leading producer, is expected to have a global market share of more than 30 per cent.

In an interview, Mr Ollila said he did not see Nokia's forecast for 2005 as aggressive. The growth would come through "a combination of emerging markets and a good and healthy replacement market".

He said: "Towards the year-end you could even see the 3G forecast as being cautious, there is even some upside on 3G."

In value terms, growth would be "somewhat lower" but Nokia would be helped because of a large number of new products, he said.

In contrast, analysts at Nomura, the investment bank, are predicting handset sales growth of just 2-3 per cent and Morgan Stanley is forecasting 4 per cent.

Mr Richard Windsor at Nomura said his forecast was due to lower levels of subscriber net additions in emerging markets such as Russia and Latin America.

"I am not convinced that you can add new subscribers as quickly as you have done this year. The only thing that could prove us wrong would be increased operator subsidies on handsets or deeper price cutting by handset producers," he said.

Mr Ollila also rebutted suggestions that Nokia had been slow to get 3G handsets to the market. Vodafone, for example, features only one Nokia handset in the 10 it is using to launch its 3G services. "We can't afford to be very late, but being the first is not the issue for us," he said. - (Financial Times Service)