Nokia says road to India villages costly for foes

By Tarmo Virki

SINGAPORE, June 19 (Reuters) - Nokia (NOK1V.HE) expects its broad sales network, brand cachet and commanding market share to keep it ahead in India despite an aggressive push by rivals into the world's fastest-growing mobile phone market.

India is already the company's third largest market by volume, and Nokia, the world's biggest cellphone maker, enjoys market share there of about 50 percent, research firms have said,

-- better than its global average of about 36 percent. -- better than its global average of about 36 percent.

With more than 6 million new customers in India each month, many attracted by call rates as low as 1 U.S. cent a minute, rivals such as Samsung Electronics (005930.KS) and Sony Ericsson (6758.T) (ERICb.ST) have rolled out low-cost models and expanded their footprints by signing up new retailers.

But Urpo Karjalainen, head of Nokia's Asia-Pacific business, told Reuters that barriers to entry for rivals are high in the sprawling country.

"In India there are today about 93,000 retail outlets. It's a huge amount, and our phones are being sold in every single one," Karjalainen said on the sidelines of an industry event, adding that rivals don't sell phones in even half those outlets.

Karjalainen said building a presence in India on a similar scale would demand significant spending by competitors.

"I'm not saying it cannot be done, but it needs quite a bit of investment," he said.

He said Nokia needs to react fast as retail chains begin to sprout in India. The rise of chains in a country dominated by small retailers would make it easier for rivals to build their presence.

A big retail presence is crucial in Asia, where more than 70 percent of consumers decide which phone to buy at the point of sale, he said. In Europe and the United States, customers often get their cellphone from their carrier.

Nokia expects 300 million new cellphone users in India by 2010, with Indonesia, Vietnam and Bangladesh also key growth markets in Asia. Karjalainen said the Finnish firm enjoys cost benefits thanks to its scale, but added it can squeeze even more from its production chain.

"We can still do better and we have plans to do better in terms of deployment and execution," he said.

((Editing by Tony Munroe; Reuters Messaging: tarmo.virki.reuters.com@reuters.net; +358-9-680 50 235, news@reuters.fi)) Keywords: NOKIA INDIA/

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