AME: A Refuge for Handset Vendors

As the global recession continues to take a toll on mobile handset sales, the Africa and Middle East (AME) region has become an increasingly brighter spot for growth, finds a new Pyramid Research report.

In terms of units sold, AME is, perhaps surprisingly, the second largest region in the world after Asia/Pacific: In 2008, AME accounted for 14.8 percent of global handset sales.

And according to the new "Africa & Middle East Telecom Insider" report from Pyramid, "A Refuge for Battered Handset Vendors," the region is expected to maintain its handset growth levels this year while the rest of the world's sales decline.

It's no secret how the global recession has hit handset sales particularly hard. Among the top handset suppliers, sales were down 14 percent year-on-year during the first quarter of this year, according to Pyramid.

Device sales in the AME region -- in which Pyramid includes Africa, the Gulf, Iran, Turkey, and the Levant -- are somewhat shielded from the economic factors affecting other parts of the world, mainly because of the strong mobile subscriber growth in these countries. Pyramid expects mobile service subscriptions to grow by 20 percent in AME and the Asia/Pacific from 2008 to 2009, compared with a global average of 14 percent.

And the AME region has been the fastest growing handset market between 2005 and 2008, with sales of new handsets growing at a compound annual growth rate of 28 percent, compared to 16 percent globally, notes the report.

Pyramid expects new handset sales in AME will be stable in 2009 compared to 2008, while device sales are expected to decline by 25 percent in Eastern Europe, by 20 percent in Western Europe, and by 3 percent in the Asia/Pacific region during the same period.

Demand for low-cost and ultralow-cost handsets will drive most of this market activity, but the opportunities for growth span just about every device price point. High-end smartphone demand is expected to increase in the region during the next five years as more 3G networks are deployed and business customers rely more on mobile communications. Indeed, high-end smartphones accounted for about 4 percent of new handset sales in AME in 2008, and smartphones' share of sales is expected to increase to 24 percent by 2014.

The proliferation of 3G networks will spur demand for 3G handsets, too. The Pyramid team predicts that between 2008 and 2010 the number of 3G networks in the region will more than double from 14 to 29.

— Michelle Donegan, European Editor, Unstrung

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