HCL Info, Nokia in new 5 year deal

By agencies   |   Tuesday, 21 February 2006, 08:00 Hrs
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CHENNAI: HCL Infosystems, the sole distributor of Nokia mobile phones in India, has entered into a revised agreement with Finland-based Nokia to split the distribution business.

As per the new agreement, both the companies will jointly distribute the mobile handsets in the country. The existing exclusive distribution agreement of HCL with Nokia is set to expire in August. Over the next 18 months, in a phased manner, HCL expects the business volumes from the sale of handsets to be split equally between HCL and Nokia in phases.

Commenting on the new agreement, HCL Infosystems Chairman and CEO, Ajai Chowdhry said that since the mobile subscriber growth is set to grow exponentially, even with lower volumes, the revenues, profitability growth and margins of HCL will be unaffected.

“If you put in two competing distributors, then margin erosion takes place. Nokia will sell at the same price and terms. It will maintain a balanced mix all over the country,” he added.

Nokia will be selling its handsets along with HCL, based on the bifurcation of territories that is yet to be worked out. Chowdhry said, “We will be running a pilot in two cities and based on the progress, the bifurcation will be decided over a period of 18-24 months.”

For the half-year ended December 2005, out of consolidated revenues of $1157.04 billion for HCL, the distribution of Nokia handsets accounted for 76.4 percent at $884.09 billion.

This was in continuation of the trend seen for the year ended June 30, 2005, in which out of consolidated revenues of $1768.86 billion, the contribution of Nokia's handset distribution stood at 71 percent.

The margins for the Nokia distribution segment have not been disclosed separately, but are clubbed with the overall contribution of the office automation and telecom segment.

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