Nokia sees consolidation among mobile phone makers

HELSINKI - The world's top handset maker, Nokia, said today it expected consolidation among mobile phone makers as competition made life difficult for smaller rivals.

"Consolidation has continued, and I feel it will continue to happen," CEO-designate Olli-Pekka Kallasvuo told the Lehman Brothers Wireless and Wireline Conference, webcasted from Phoenix, Arizona.

Kallasvuo said companies with less than 15 per cent market share, which include all but Nokia and Motorola, would struggle in the future.

"The competition in the market place is very tough," Kallasvuo said.

"Some of the competitors at the moment are very aggressive, but at the same time there is a great opportunity to differentiate at the upper end of the market where WCDMA (3G) is really taking off as we speak," he said.

Kallasvuo said he expected to see normal seasonality this year, meaning sales will grow at the end of the year during the Christmas shopping season.

"Towards the end of this year I do not see anything that would differ from the normal type of situation right now if you look at the second half of the year," he said.

Currently chief operating officer, Kallasvuo from June 1 will take over as chief executive from Jorma Ollila, who transformed the company from a maker of rubber boots into the world's biggest cell phone producer.

Kallasvuo said he expected Nokia's Enterprise division to move to breakeven early next year.

The division, which focuses on phones for business users, has suffered from falling sales in recent quarters due to a lack of new phones but recently started shipping three models from its E-series of handsets.

In the first quarter of 2006, the Enterprise unit's operating loss widened to 66 million euros ($137.43 million) from 9 million in the same period in 2005.

A 26-year veteran at Nokia, Kallasvuo held the role of chief financial officer for about 10 years and ran Mobile Phones, Nokia's biggest unit by volumes and profits, in 2004-2005.

- REUTERS