Nokia to supply phones worth $2 billion to China Postel

Nokia Research Center is seen in Helsinki on October 18, 2007. Nokia, the world's largest cell phone maker, said on Friday it has signed a strategic partnership deal worth about $2 billion to supply handsets in China. REUTERS/Antti Aimo-Koivisto/Lehtikuva

HELSINKI (Reuters) - Nokia NOK1V.HE has signed a strategic partnership deal worth $2 billion to supply handsets in China for top phone wholesaler China Postel in 2008, less than its 2007 $2.5 billion deal, it said on Friday.

Shares in Nokia, the world's biggest cell phone maker, were down 1.8 percent to 21.81 euros by 4:51 a.m. EST, slightly underperforming a 1.4 percent weaker DJ Stoxx European technology index .SX8P.

Hannu Rauhala, analyst at Pohjola, said the lower value this year may be partly due to lower cell phone average selling prices. “That is one explanation. It could also be that there will be more orders later,” Rauhala said.

Carnegie analyst Janne Rantanen said: “This is only a framework agreement and in practice there is no commitment on either side. We don’t even know if the last year’s $2.5 billion went through.”

Nokia sold more phones in the fourth quarter than its three closest rivals combined and has a strong lead in emerging markets such as China and India, thanks in part to its efficient distribution system.

Nokia said China Postel has about 30 percent market share among distributors in the country.

Reporting by Sami Torma; Editing by Louise Ireland and Erica Billingham