Retail Sales Of Mobile Phones Up

KIEV, Ukraine -- Fuelled by rising demand for telecommunications services, stronger competition among the country’s mobile communications providers and an overall drop in mobile phone prices, the sale of mobile phones skyrocketed last year to an all time high.

The Samsung E500 a very popular mobile phone with the ladies

However, industry insiders and observers predict a slowdown and eventual decline starting as early as this year.

The sale of mobile handsets in Ukraine rose 67 percent year-on-year in 2006, reaching an all-time high of 10 million units, AVentures Group retail chain said in a recent report.

In monetary terms, 2006 sales amounted to $1.53 billion.

AVentures Group, which controls several companies involved in wholesale and retail of mobile handset, called mobile handsets retail one of the biggest businesses in Ukraine.

Oleksiy Semenko, deputy director of Mobilochka, a leading Ukrainian cell-phone retailer, said the country’s mobile phone business has grown aggressively in recent years and currently ranks as one of the largest in Europe.

Last year, Ukraine surpassed Spain in terms of mobile subscriber base and is currently ranked 6th in Europe. He added, however, the sharp growth is already cooling down.

“The year 2006 was a record-breaking year in absolute numbers, in the number of mobile handsets sold, whereas in relative figures it only made 67 percent growth versus 117 percent in 2005,” said Semenko.

Serhiy Doropheyev, marketing research department director at AVentures Group, said sales are expected to remain high but will not increase significantly this year, as the number of new mobile phone users has peaked, reaching 100 percent penetration levels.

The market growth rate expected for 2007 will be only 5 percent, with 10.5 million handsets expected to be sold, he predicted.

Semenko predicted that mobile phone sales could even decline by about 9 percent this year.

The surge in sales has been driven by several factors, including the availability of more affordable mobile phones, rising income and overall rising demand for mobile telecommunication services, Doropheyev said.

Last year, about 45 percent of all mobile phone sales were attributed to existing users buying new phones. A large share of phone sales was driven by the arrival of new mobile telecommunication service users.

For example, Kyivstar, the leading mobile phone service provider in terms of subscriber base, posted a 54.5 percent rise in clients last year.

The company finished the year off with 21.5 million subscribers.

UMC, Ukraine’s second largest mobile telecom services provider, trails not far behind with about 20 million subscribers.

But penetration levels in Ukraine, a country of 47 million, are reaching their max. As a result, about 90 percent of all mobile phone sales this year are expected to come from existing users replacing older phones.

The arrival of third-generation mobile phone technology, which allows for video conferencing and other new hi-tech services, could trigger an additional surge in mobile phone sales.

The arrival of 3G, expected this year or next, could prompt users to upgrade to top of the line phones that support this technology.

Source: Kyiv Post

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