Telefonica Moviles to buy phones from LG

November 15, 2004

LG Electronics said it recently began supplying 3G wireless handsets to Spain's Telefonica Moviles, in a move to expand its presence in the high-end handset segment.

Financial terms of the agreement, including the number of handsets initially delivered to the Spanish company, weren't disclosed.

LG, which makes home appliances and mobile handsets, said it is supplying the tri-band mobile handset - the LG-U8150 model - which features a mega pixel camera and allows video-on-demand and multimedia messaging service, to Telefonica Moviles.

The company said the supply agreement will allow it to expand its global presence as a provider of 3G phones.

The global market for 3G WCDMA, or wide band code division multiple access, phones is expected to grow to 50 million units next year from an expected 25 million this year, LG said.

LG's handset business has benefited from the company's supply of 3G phones, which tend to command higher average selling prices due to more data-intensive features.

The company agreed in May to supply 3 million mobile handsets based on 3G technology, to Hong Kong-based Hutchison Whampoa in a deal valued at about $1 billion.

In September, the company said it was teaming up with Orange, the telecommunications arm of France Telecom, to launch a 3G wireless handset.

Orange said earlier this month that 3G services will be launched in the U.K. and France before the end of this year.

LG saw its operating profit margin from its mobile handset business improve to 9.4% in the third quarter ended Sept. 30, thanks to increased shipments of 3G phones.