Emerging markets to get most growth

Cell phone companies use creative marketing in developing countries.
TORONTO GLOBE AND MAIL
HALIFAX, Nova Scotia -- More than 2 billion people in the world have a cell phone. But for the world's largest mobile phone companies, a new race has begun for the next billion.
Most growth will come from the developing world, which already has more cell phones than now exist in the industrialized countries.
"By 2008, there will be over 3 billion people using mobile communications," said Johanna Liukkonnen, Nokia Corp.'s industry marketing manager. "All the growth, even in the next three years, relates to emerging markets."
Nokia, along with its biggest competitors Motorola Inc. and Vodafone Group PLC, wants to extend its reach to the world's most remote regions, and not just for profit. Nokia sees it as a social duty, too.
Nokia has teamed up with the Grameen Foundation of Bangladesh to develop less-expensive cell phones used in Africa that are durable, dust-resistant and have flashlights -- a useful function for the many regions without electricity. It has also discovered how microcredit -- essentially, tiny loans to millions of poor people who lack collateral -- can pry open new, and vast, rural markets.
Entrepreneurship
In Bangladesh, small loans have been used to fund village entrepreneurs, who then buy cell phones and lease out time to their neighbors.
"It's a win-win-win model, all the way down," said David Keogh, deputy director of the Grameen Foundation's Technology Center in Seattle.
"Worldwide, rural markets have not really been cracked open by the telecom operators, simply because they're not willing to invest. ... What we've done with organizations such as [African phone company] MTN is to say, 'you have a channel to market: it's the microfinance sector.'"
Two African phone companies -- MTN Uganda and MTN Rwanda -- that partnered with Grameen are posting profits from the initiative and have extended their reach in their countries, Keogh said.
Motorola, meantime, last year unveiled a phone that costs less than 40, aimed specifically at emerging markets. Vodafone recently jointly released a study showing the growing opportunity in South Africa for lower-income clients to use mobile phone banking.
The plans aren't without risk. Margins are tight -- though Motorola says it still makes a small profit on its cheap phones -- and government regulations can squeeze growth.
But by moving early into markets such as Uganda and the Philippines, telecom companies hope to get a head start on building customer loyalty. They also expect profits will grow as poorer clients raise their incomes.
It's certainly a win for those in the developing world, particularly in rural areas. Access to cell phones and other personal communications devices are letting customers monitor market prices, conduct banking transactions and learn to read.
"It's amazing and provides income to a lot of people," said Khadija Shamte, a Kenyan management consultant attending the Microcredit summit.