Nokia's Lumia deal with China Mobile raises hopes

HELSINKI Wed Dec 5, 2012 7:30pm IST

Microsoft CEO Steve Ballmer displays a Nokia Lumia 920 featuring Windows Phone 8 during an event in San Francisco, California October 29, 2012. REUTERS/Robert Galbraith

Microsoft CEO Steve Ballmer displays a Nokia Lumia 920 featuring Windows Phone 8 during an event in San Francisco, California October 29, 2012.

Credit: Reuters/Robert Galbraith

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HELSINKI (Reuters) - Nokia is to partner with China Mobile, the world's biggest mobile operator, in a sales deal that will give the Finnish company an opportunity to win back Chinese market share from Apple's iPhone.

China Mobile, which has more than 700 million subscribers but no contract to sell iPhones, will start selling a version of Nokia's flagship Lumia 920 smartphone in the world's largest mobile market.

Nokia shares were up 8.7 percent at 2.75 euros on the Helsinki bourse at 1305 GMT.

"They will have an advantage that their main competitor doesn't have," said analyst Eric Beaudet from Natixis Securities.

The phone will be available for order in Chinese market by the end of the year at a retail price of 4599 yuan.

Sales of Nokia's new Lumia 920 and 820 models --- which operate on Microsoft's (MSFT.O) Windows Phone 8 software -- are seen as crucial for the Finnish company as it tries to regain global market share from Samsung (005930.KS) and Apple.

"It is not a surprise, but it still means a giant opportunity for Nokia, maybe one of the best opportunities for its smartphones right now. This market has a lot of piled-up demand for high-end smartphones," Nordea Markets analyst Sami Sarkamies said.

Nokia's stock is still down 28 percent this year, although it has edged higher in recent weeks on hopes of promising Lumia sales.

"People around the world are responding positively to the new Lumia devices, and we are confident that the enthusiasm will extend to China," president and chief executive Stephen Elop said in a statement.

Also on Wednesday, Nokia unveiled the Lumia 620, its cheapest Windows 8 smartphone. It will be priced at $249 and go on sale in January, at first in Asia. Analysts saw the launch as another reason for the upbeat share reaction.

"It seems they are able to lower Windows Phone prices quite quickly, quicker than most people anticipated," said Beaudet.

Nokia's share of the global smartphone market has plunged to less than 10 percent from 50 percent during its heyday before the iPhone arrived in 2007. Today, Nokia relies on Windows after dumping its own software platforms last year.

Nokia has faced fierce smartphone competition in China from local rivals after it started selling its earlier Lumia series there in the first half of the year.

(Additional reporting by Chyen Yee Lee and Terhi Kinnunen; Editing by Dan Lalor, Hans-Juergen Peters and Giles Elgood)

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