Nokia rolling out micro finance for mobile handsets in India

The company expects high growth in demand for mobile phones in India's rural markets

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 on Wednesday 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, Kamlesh Bhatia, a principal research analyst at Gartner, said last month.

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.

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