Telecom Lead India: Mobile major Nokia has decided to
close down its financial service called Nokia Money globally including
India.
The decision is a part of Nokia’s evolving strategy and
the business environment, under which Nokia is exploring options for a
structured exit from the Mobile Financial Services business.
Nokia Money was launched in 2010 in association with Yes
Bank and Union Bank. Nokia is also offering the services independently under
Nokia Money brand to about 2 lakh subscribers now. In total, around 1.2 million
people are using Nokia mobile money services throughout India.
A spokesperson of the company said that the mobile
financial services business is not core to Nokia so they plan to exit the
business.
The company has closed down most of the mobile
services launched under previous management and has also cut thousands of
jobs as it continues to battle falls in its market share.
According to media reports, the immediate impact will be
on the 2 lakh Nokia Money users who will get free refund. On the other hand,
Yes Bank and Union Bank are likely to take over operation and their users will
not be impacted.
Furthermore, information regarding the scrapping of
services will be sent to users starting March 15. However, Nokia will continue
the service for 3-4 months to give enough time for subscribers to use up the
money.
Recently, Standard & Poor has cut Nokia’s NIK1V.HE
credit rating to BBB- from BBB and said a further downgrade is possible, which
means Nokia could dip to BB+ which is considered a speculative grade.
Nokia reported 9 percent decrease in sales (including
Nokia devices, Nokia Siemens and location business) at EUR 38.65 billion in
2011 compared with EUR 42.44 billion in 2010. Q4 2011 sales were down by 21
percent to EUR 10 billion from EUR 12.65 billion.
Nokia has been undergoing turbulence over the past
several months, due to tough competition from leading smartphone vendors like
Apple and several low-cost device makers in Asia.
Nokia is striving to regain its handset market share by
divesting its businesses to focus on phone business and location-based
services.
Nokia India revenue (including Nokia devices, Nokia Siemens, and Navteq
business revenues) decreased to EUR 2.923 billion in 2011 from EUR 2.952
billion in 2010.
In 2011, Nokia’s handset market share has also plunged to
38 percent, against 72 percent in 2010, which is the testimony of its gloomy
performance in Indian market, according to a CyberMedia Research report.
