Fears for mobile market as Nokia slumps

There are fears that the mobile phone industry may go the same way as the dotcoms, after the financial markets panicked over the annual sales figures of Nokia.

Despite reporting a 64 per cent annual increase in handset sales in 2000, the company's share value dropped almost a fifth - around £25bn - last week.

There were also big falls for major mobile players Vodafone, France Telecom and Deutsche Telekom on the back of the news.

Nokia reported that it sold 128 million phones in 2000, to confirm that it was still by far the biggest manufacturer. The company estimated the total market was around 405 million phones, giving it a 32 per cent share.

But analysts had expected Nokia to move 135 million phones, with the total market at 420 million. There are fears that the main mobile markets are now reaching saturation levels and that the good times for mobile companies are about to come to an end.

Analyst Forrester Research estimates the saturation levels for the main markets will be 76 per cent, but many, including the UK, are already around the 60 per cent mark.

Add to this the high-cost of building 3G networks, and the sluggishness shown by the operators in rolling out general packet radio service (GPRS), and the markets may have genuine fears as to the future size of the market.

But Nokia said the total global sales figure was in line with its earlier forecasts. It also said the total mobile subscriber base was now more than 700 million, representing 12 per cent of the world's population.