Western European 4Q Handset Sales Up 28% Vs 3Q - GfK

BERLIN -(Dow Jones)- Market research firm GfK AG (GFK.XE) said late Thursday sales of mobile handsets grew strongly in western Europe in the fourth quarter of 2004, gaining 28% on a unit basis over the third quarter.

Both retail and wholesale average selling prices were down about 3% in the quarter, in line with seasonal trends, and signaling continued vital subsidy support from Europe's operators. Sales of GSM phones tailed-off considerably, as WCDMA, or third-generation, sales accelerated.

More than any other factor, the shift toward WCDMA handsets moved the numbers, as Hutchison Whampoa Ltd. (0013.HK) was joined by Vodafone Group PLC (VOD), Vivendi SA's (V) SFR, Telecom Italia Mobile SpA (TIM.MI), France Telecom SA's (FTE) Orange, Wind SpA (WIF.YY), and other operators gaining traction in 3G.

These more seasoned operators led with newer models and longer-term tariffs. Tom Dailey, managing director of GfK Equity Research, said "following considerable trial and lots of error, 2003's shambolic WCMDA launch was finally supported in early 2004 by some good handsets, and in December by responsible tariffs."

Together with traditional holiday handset gifting, handset suppliers to Hutchison could expect a 'perfect-storm' type effect, as inexpensive WCDMA handsets on prepay queue up to meet the demand spike.

Not surprisingly, brands gaining significant share were those focused on 3G. Thanks to orders from Hutchison, both LG Electronics Inc. (066570.SE) and NEC Corp. (NIPNY) added about 25% to their share positions. The corresponding share loss was spread fairly evenly across the traditional brands, most of which moved little either up or down.

At the same time, overall market strength will help all suppliers reach their 4Q goals.

There were some standout performances, particularly Motorola Inc. (MOT), which assembled a broad portfolio of WCDMA operator relationships and mounted a late sales surge in both GSM and 3G handsets. As a result, Motorola was able to build on the wholesale pricing premium it initiated in 1Q 2004, after two years trolling the European market's bottom rungs.

GfK point-of-sale data comes from proprietary GfK reseller panels, including in excess of one million points of sale in various channels, including retail, network operators, mail-order, office equipment dealers, Internet, independent stores, and value-added resellers.

(END) Dow Jones Newswires"

Posted to the site on 14th January 2005