Nokia mobile phones importer Eurocom Group, owned by Shaul Elovitch, will begin importing mobile telephones made by China's ZTE Corporation (SZSE: 0063; HKSE: 0763). Eurocom has been coping recently with loss of market share due to Nokia Corporation's (NYSE; LSE; HEX: NOK) troubles in the global smartphone market.
IDC ranks ZTE as the world's fourth largest mobile phone manufacturer, with a market share of 4.7% in the second quarter of 2012, up from 3.7% in the corresponding quarter of 2011. It has a market cap of $8 billion on the Hong Kong Stock Exchange and Shenzhen Stock Exchange.
"Eurocom will market all ZTE products, including routes, mobile modems, infrastructure products, and tablets," says Eurocom Mobile Communications CEO Ilan Greenbaum. "We'll start marketing the products in a few weeks."
ZTE will have to convert some of its Android-based smartphones to Android versions that support Hebrew. As this is a new contract, Eurocom does not yet have a full marketing strategy for selling ZTE products in Israel.
Selling ZTE smartphones will have a major effect on the low-cost and mid-range smartphone market in Israel, and possibly on the high-end market as well, because Eurocom is unlikely to have Nokia smartphones for sale before the end of the year, and Eurocom will probably invest all its efforts and most of its marketing budget on ZTE. This will undoubtedly affect sales of smartphones made by Motorola Mobility Inc., LG Corporation (KSX: 66570; LSE: LGLD), and Sony Mobile Inc., but is unlikely to affect Apple Inc. (Nasdaq: AAPL), because of its strong brand, which no Chinese brand can yet challenge.
"The communications market is undoing major change in 2012, partly because of the entry of new mobile carriers and mobile virtual network operators (MVNO)," says Greenbaum. "In early 2013, when the law separating the cost of end-user equipment and the cost of airtime comes into effect, the share of the open market will grow. At Eurocom, we found a need to prepare and adapt to the market changes and to expend our offering of products and services so we will have a reasonable response for every carrier, every sales channel, and at every price level. The link-up with ZTE and its range of products is an excellent supplement to Nokia's current and future range of products in Israel, and I am sure that there will be strong synergy from these operations."
Although for Eurocom the deal with ZTE supplements its Nokia operations, in practice ZTE and Nokia are competing head-to-head as ZTE wants to enter the high-end smartphone market and unveiled its catalogue at the World Mobile Congress in Barcelona in February. Eurocom may also benefit in another way: although it is the authorized importer for Panasonic Corporation (TSE: 6752; NYSE: PC), it does not import Panasonic smartphones, because it imports Nokia phones. However, now that Eurocom will import ZTE devices, it may also now try to import Panasonic phones.
Eurocom Group is the controlling shareholder in Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ).
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2012
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