Nokia Using Microfinance To Sell Phones in Rural India

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Aug. 21 – Nokia is looking to extend a pilot scheme that has been operating in 2,500 villages in the southern states of Andhra Pradesh and Karnataka to make it’s mobile phones more affordable to rural Indians.

The company, which accounts for about half of all mobile handsets sold in India, has been using microfinance schemes to allow poor villagers to buy its products. A microfinance organization has bought handsets from Nokia and sold them to women in rural villages by charging them Rs 100 or about US$2 a week for as long as 25 weeks.

The scheme has been a success despite the country struggling with the economic crisis and a failed monsoon. Nokia is now planning to expand the same financing scheme to twelve Indian states. Nokia Corporation President and CEO Olli-Pekka Kallasvuo said in a statement: ”We plan to roll out a unique microfinancing offer in 12 states to make mobile phones more accessible to rural markets and notably, to the fairer sex in rural areas.” By 2010, India is forecast to have about 500 million mobile phone users from its current 427 million users.

Mobile phone use India’s rural areas is still low at 13 percent and the company’s use of microfinance schemes to sell its phones may rapidly increase that figure.

Nokia India Vice-President and Managing Director D Shivakumar was quoted by the United News of India as saying that industry estimates project that the benefits of mobility will touch 500 million people in India by 2010. ”We believe that much of this growth will take place in non-urban markets, and rural penetration in India is still very low. Our objective will be to try and bring more and more consumers into the fold of mobile telephony and to maximise customer value creation by lowering the access barriers as well as total cost of ownership,” he said.