Orascom marks Nokia’s most important Ovi partnership to date

Although 3 UK confirmed this week that it would offer Nokia’s Comes With Music unlimited downloads service, tied to its first touchscreen handset, in general the Finnish giant is having difficulties convincing its traditional cellco partners to support its range of Ovi web services, because of potential conflicts with the operators’ own brands and applications. But focusing too heavily on the dilemmas of the western European cellcos ignores a key element of Nokia’s ambitious strategy to reinvent itself as a mobile internet services giant - the focus on emerging markets. Thus the touchscreen musicphone, XpressMusic 5800 (previously codenamed Tube), and the N96 superphone, will be shipped first in emerging economies such as India, and will not reach some of Nokia’s European heartlands until after the holiday buying period. And now the world’s largest phonemaker has signed a highly significant deal with one of the most rapidly growing telcos in emerging economies, Egypt-based Orascom.

Orascom, which is expanding rapidly in its bid to create a multinational wireless super-carrier in the Middle East, Africa and Mediterranean, plans to offer Nokia’s Ovi portal and web services across its whole subscriber base. Included in the deal are Nokia Maps, Nokia N-Gage games and music applications. Orascom joins 3, Orange, Telefonica, T-Mobile, Telenor, TIM and Vodafone in supporting Ovi - they all offer some Nokia handsets that showcase at least some Ovi services on the homescreen, although the level of commitment varies between the various partners. Vodafone, for instance, has carefully segmented its target base for music downloads, offering Nokia Musicstore on high end smartphones and its own service for the midrange - but it has stopped short of the highly integrated Comes With Music, whose unlimited offer is a major challenge to other music options. And Orange and T-Mobile have stepped back from supporting Ovi too heavily in terms of homescreen support and branding, as they try to push their own portals, though the Nokia apps are available within their stores. There is no such ambivalence from Orascom. Like other major emerging market operators that Nokia is chasing, it is under intense pressure to spend its resources on expanding its networks and gaining customers and handset partners, leaving it little time or cash to develop its own internet services and portals, especially as its brands are generally immature at this stage. Yet internet services are even more vital in these rapidly growing markets than in developed environments. While carriers need to deliver low cost tariffs and devices for low income communities, they must balance those with high value offerings and customers - and tapping into the rapidly growing middle classes in markets like India and north Africa requires not just attractive, well priced phones, but the web and media services that all consumers crave. In many cases, where there is limited wireline broadband build-out, the wireless device will be the main way for these newly affluent users to get online, creating a huge opportunity for carriers to become the primary broadband as well as mobile provider - as long as they can offer attractive, usable and well priced web and content. Such partnerships, then, are ideal to drive Nokia’s devices, with their increasingly tightly integrated applications, into new user bases which, while they may have lower average income than their western equivalents, are increasing their telecoms and internet spend at a faster rate, with most of this potentially going to a strong wireless operator and its applications partner. Orascom and its affiliates control almost 100m mobile connections worldwide, as of the second quarter of this year, mainly based on GSM/EDGE, but with rapid expansion of 3G and WiMAX too. The group has operations as far afield as Algeria, Pakistan, Egypt, Tunisia, Bangladesh and Zimbabwe, and has expressed the intention of launching in Canada (where it is part of the Globalive group, which acquired AWS spectrum recently) and North Korea (where it acquired a 25-year license in one of the world’s last remaining untapped markets). However, the company pulled out of a partnership with Hutchison Telecom’s emerging markets group when the Hong Kong giant sold its share of its Indian joint venture to Vodafone, and Orascom is still on the look-out for a way into India. Orascom, headed by Naguib Nawiris, saw its market capitalization increase from $340m in 2003 to about $16bn in mid-2008.