Cheap phone contract for Motorola

Mobile phones could soon be sold for less than $30 (£16) in developing countries after Motorola won a contract to produce low-cost handsets.

The US firm is expected to manufacture six million low-cost phones for sale in 17 countries including India, Nigeria, Bangladesh, Yemen and Kenya.

The cheapest mobile phones using the GSM industry standard now cost between $30 and $40 in emerging markets.

Operators said high taxes still made phones unaffordable in some countries.

Economic stimulus

Motorola will supply the phones to operators in the countries concerned, with shipments starting early next year.

At wholesale prices, the phones will cost less than $30.

Retail prices will vary from market to market, depending on taxes and other factors, but are expected to be below $30 in many cases.

It will fuel significant economic growth, as well as major social changes Erik Aas, chief executive of Bangladeshi firm GrameenPhone.

Motorola has already produced about six million low-cost phones through an industry initiative to make mobiles accessible to more people in emerging markets.

The project is designed to capitalise on rising demand for mobile phones in India, the world's fastest growing mobile market, and other countries in Asia and Africa.

Motorola said low-cost phones were essential to economic development.

"In emerging markets, consumers and operators want mobiles that meet specific performance requirements while exceeding expectations for quality, reliability and design," said Ron Garriques, president of Motorola Mobile Devices.

"Additionally, they want all of this at a value price."

The phones will incorporate powerful batteries to ensure they can be used for longer without charging - vital in many communities without access to a reliable power supply.

Price barrier

Operators believe the high cost of handsets is the single largest barrier to connecting millions of people in developing countries.

"The initiative is a major step towards reducing the start-up price," said Erik Aas, chief executive of Bangladeshi firm GrameenPhone.

"It will fuel significant economic growth, as well as major social changes, when so many people can communicate directly from their home or on the move."

Motorola is vying with Finnish firm Nokia to dominate the low-cost phone market.

The industry has warned that "punitive taxes" threaten to slow down the growth of mobile communications in developing markets.

According to the GSM Association (GSMA) - which represents manufacturers and network operators - taxes in countries such as Turkey add about 45% to retail prices.

"We believe reducing taxes will help businesses and individuals in developing countries to reach out and connect with each other and the developed world," said Rob Conway, GSMA's chief executive.