Nokia to Roll out Micro Finance for Mobile Phones

Nokia plans to roll out a micro financing program for mobile phones across 12 states in India.

The company has completed a pilot of this program across 2,500 villages in the rural areas of the Andhra Pradesh and Karnataka states of India. Nokia tied up for the pilot with a micro finance institution to offer mobile handsets on installments of 100 Indian rupees (US$2) a week for 25 weeks.

The company said in a statement that it expects that the benefits of mobility will reach 500 million people in the country by next year.

The penetration of mobile phones in rural India is still very low at 13 percent, and much of the growth in mobile telephony will be in non-urban markets, the company said.

Its objective is to lower access barriers as well as total cost of ownership in these markets, it added.

Nokia did not name its micro finance partner.

The mobile phone giant is also launching Nokia Life Tools commercially in the country this year, which includes a range of agriculture information and education services targeted at non-urban consumers. The service was tested in Maharashtra state.

India added 12 million mobile subscribers in June, the latest month for which data is available, taking the total number of subscribers to 427 million, according to the Telecom Regulatory Authority of India (TRAI).

Mobile service operators and handset makers are targeting India's rural market as the next big opportunity. The rural market is however low margin and geographically dispersed.

Data from TRAI for the first quarter of this year showed declining ARPU (average revenue per user) and utilization of mobile phones by consumers, across service providers, reflecting the economic slowdown and expansion of services in rural markets.

Mobile Phone Users in Rural India Cross 100 Million

According to Telecom Regulatory Authority of India (TRAI), the country had 109.7 million rural mobile subscribers at the end of the first quarter, which is up by 18 percent from 93.2 million users in the fourth quarter of last year.

The country's 282 million urban wireless subscribers accounted for 72 percent of all mobile users at the end of the first quarter.

Indian mobile services companies and handset vendors have identified the rural market as a new growth opportunity, as urban markets are getting saturated.

For example, Nokia has launched its Life Tools service in June, after a pilot project in the Indian state of Maharashtra. The service offers agriculture information, education, and entertainment targeted at people in both rural areas and small towns.

The number of mobile subscribers in the country is on the upswing with demand both from rural and urban markets.

According to TRAI data, the number of subscribers for mobile services across the country has increased to 391.76 million in the quarter ended March this year, up by 50 percent from 261 million in the same quarter last year.

However competition and tariff cuts have brought down the average revenue per user. Indian mobile service providers are focusing on value added services, including applications to boost revenue.

A number of foreign mobile service providers have invested in joint ventures in India, including Vodafone and NTT DoCoMo.

Tata Teleservices, which has NTT DoCoMo as an investor, has begun rolling out services across India under the Tata DoCoMo brand. NTT DoCoMo said it plans to progressively bring to India new services such as its i-mode wireless Internet service, location-based services, and mobile payment.