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Nokia Corporation Message Board

  • racistholder racistholder Jan 20, 2013 8:49 PM Flag

    China subsidies are going to put NOK above all the rest!


    China Mobile (NYSE: CHL) is going to heavily subsidize the Lumia 920T phones, which is going to be huge for Nokia. If Chinese consumers sign up for a 2-year plan, then they can pretty much get the phone for free. Apple's (NASDAQ: AAPL) iPhone isn't subsidized and will have to compete at a hefty $740 price point. Keep in mind that China's average wage for urban households at non-private companies was $6,717 in 2011. This means that most won't want to spend such a large chunk of their income on a phone and plan and will want to opt for a cheaper alternative. China Mobile, the largest telecom company in China, has 667.2 million mobile subscribers (as of March 2012) and 59.6 million 3G subscribers (March 2012). With China's wages rising at a rapid rate each year (up 8.5% in 2011 when adjusted for inflation for non-private workers and up 12.3% for private workers); Nokia has a lot of potential to gain a foothold in a rapidly growing market. Right now China makes up 22% of global smartphone sales and the US makes up 16% (as of Q1 2012 according to Canalys), so this growth catalyst is one every investor should look at.

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    • If Apple had announced this deal, it would have shot Apple's price up to $600/share or definitely put the juice into a stiff price movement upwards, from a speculative position. The effect for Nokia however will not come to fruition until at least 1 quarter or 2 are under its belt.

    • As much as I'm happy about the China Mobile deal, let's not make the deal sound better than it is.

      In order to get the 920 at 100% off, the customer needs to sign onto a 2-year plan that is 388rmb a month or greater. Considering the average salary in major cities is 5-6000rmb a month and 1-3000rmb in lesser cities, 388 is not a cheap price. In addition, the customer needs to pay for the phone up front (4599rmb). Then the amount is returned piecemeal over the next 24 months.

      On the other hand, when I went to buy my 920 on Sat, within the 30 min I was there, 3 people came and bought the 920 without a plan.

      So I think it's more important that the 920T can access the China Mobile 3G network vs. iPhone5 can only access the 2G network.

      Sentiment: Strong Buy

      • 1 Reply to st0ckpi1e
      • Also want to add that plans under 388 can also get a discount on the phone, just not 100%. Payment for the phone is still up front, though.

        Thus it's even more important for Nokia to make sure enough phones are available in the stores when the young folks get their red envelopes in 3 weeks. And also when the companies pay out year-end bonuses over the next couple months.

        Sentiment: Strong Buy

    • Absolutely true! That's what I've been saying all alone! This subsidize deal forces the consumer to
      switch phones!

      Sentiment: Strong Buy

8.54+0.03(+0.35%)Sep 17 4:01 PMEDT

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