Top10: LG: Leap Ahead

The overall growth in CDMA enabled LG to maintain
its numero uno position in the handset market. The company has also
emerged as a market leader in the fixed wireless phones space. It has also
provided solutions, ranging from wired and wireless handset to telecommunication
equipment. LG Electronics is steadily expanding its world market share in CDMA,
GSM, and WCDMA (UMTS) through innovation and development of next-generation
wireless telecommunications technologies. The company generated revenue to the
tune of Rs 3,326 crore, as against last year's Rs 2,314 crore, a growth of
44%.

As the company continued to sell CDMA phones directly to
service providers such as Reliance and TTSL-its market share grew
phenomenally. Most of the handset sales to these service providers were in the
mid-tier category. The performance this year was consistent, as the demand of
entry level and mid-tier CDMA phones is still high. It is only the existing
users who have migrated to high-end CDMA phones. In FY 2005-06, LG supplied had
60% market share in mobile CDMA segment. It accounted for 53.7%
market share in WLL segment.

This year, LG did not get any orders for supply of CDMA
phones from BSNL and MTNL. This can be attributed to a stiff competition that it
faced from the Chinese players, who offered cheaper options to the incumbent
operators.

Despite the fact that the company didn't get any business
from BSNL and MTNL, it continues to position itself aggressively in the Indian
market. The company launched 13 models in FY 2005-06 in the high-end segment; RD
2340 being the best selling model with 9 mn phones sold across the country. LG
has a strong presence in the Indian retail market with franchisees in more than
600 cities. As customer service is of prime concern for any vendor today, LG
has150 exclusive service stations in the country.

Last year, LG CDMA became the first mobile handset
manufacturer to use the special edition of BREW, which powers content downloads
such as polyphonic ring tones, wallpapers, cricket information, astrology,
travel information etc.

The company is considering
starting CDMA phone manufacturing in India as well. At present, the
Pune (Ranjangaon) plant is producing around one lakh GSM phones every
year and the company plans to invest Rs 900 crore in Pune over the period of two
years. The company's target is to produce 20 mn handsets by 2010. LG claims to
have a significant market share in high-end phones. The company has no plan to
compete in the low-end GSM phones segment.

The regulator's decision to make address verification
mandatory for post-paid subscribers has impacted handset vendors to a large
extent. It was earlier mandatory for pre-paid subscribers only. LG saw a huge
dip in handset sales in the last few months. But it is expecting that once
subscribers get used to it, the demand would go up again.