SOWETO, South Africa (Reuters) - Nokia, the world's biggest handset maker, expects 200 million more people in Africa and the Middle East to start using mobile phones by 2008, making the region one of the world's fastest growing markets.

Finland-based Nokia said on Thursday at a regional launch of a new trio of cheap phones that it expected "strong double-digit growth" this year in Africa and the Middle East, where demand is booming and market penetration is still low.

"We believe that of the next 1 billion users, 200 million will come from the Middle East and Africa, which makes it one of the fastest, if not the fastest growing region in the world," Timo Toikkanen, senior vice president for customer and market operations for the Middle East and Africa, told Reuters.

Mobile phone use shot up about 50 times in Africa between 1999 and 2003 due in part to patchy fixed-line infrastructure and falling tariffs, but only 100 million, or around 9 percent of the population, own a mobile phone so far.

Manufacturers and operators are banking on emerging markets to help offset slower growth in the developed world. Nokia expects an extra 1 billion people to start using cell phones by 2008, up from about 2 billion in 2005, with 80 percent of these coming from emerging markets.

Nokia, the market leader in Africa, has opened six offices in the world's poorest continent as it chases potentially lucrative untapped markets.

LOW-COST PHONES

It will start selling the three low-cost handsets in mid-2006. Speaking on the sidelines of the launch in Soweto, South Africa's most famous township, Toikkanen said the cheapest of the new models -- the 1112 -- would retail at approximately $55, although this could vary widely depending on tax and subsidies.

Some analysts have expressed skepticism about low-cost handsets, noting that taxes in some African countries are as high as 40 percent, which inflates prices and forces many poorer people to buy phones on the second-hand or "gray" market.

Nokia's closest rival, Motorola, said last year it was launching five new low-end handsets for developing markets with a manufacturing cost of $40 to $50.

Soweto-based businessman Simon Nkosi admired the new Nokia phones on Wednesday and said he was saving up to buy a 2610, which is likely to retail at around $90 excluding tax and subsidies and offers email and Internet access.

"I use the mobile phone a lot for my business," said the traditional dance troupe choreographer, who bought his current no-frills Nokia 3410 handset two years ago for 1,300 rand

($213).

"I have to buy a new phone this year, but I think I will wait for one of these cheap ones with email."

Sowetans were especially impressed by an audio messaging feature, which converts a verbal message into a SMS text message -- one of several gimmicks Nokia said it had designed for emerging markets, where literacy rates are lower than in the West.

Toikkanen said Nokia, which manufactures handsets at nine sites in eight countries, had no immediate plans to open a plant in Africa but was continually evaluating the possibilities.

The company declined to give forecasts on how many of the new phones it expected to sell.

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By Rebecca Harrison

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