As tariffs on mobile phone services in Saudi Arabia and Egypt ease, the good times for GSM handset manufacturers in the Middle East will continue, according to senior officials of South Korea's Samsung.

Handset sales growth in the region is averaging 8 to 12 per cent annually. But so far this has been attained through higher returns from a few markets. Considering their population and potential, GSM penetration in Saudi Arabia and Egypt is still marginal, about eight and three per cent respectively.

Both are now trying to change that with incentives. The kingdom cut rates on the popular "family" SIM cards last month, which, according to Samsung, has generated good demand for handsets. Egypt is pushing for higher sales of the cheaper pre-paid cards to open up the market. Currently there are only two million subscribers in a population of 65 million.

The UAE remains the leading regional GSM market with estimated sales of over 70,000 a month. Re-exports account for 40 to 50 per cent. Current penetration level based on population is about 45 per cent.

But Lebanon has raised some concerns. Singh said, "All new GSM subscriptions have stopped since earlier in the year as the two operators, Cellis and Libancell, work out a solution with the government on their tariffs. We expect a positive development to come through shortly."

Samsung has yet to tap the Iranian market and is working out a strategy. "Iran has this huge potential, but there are also regulations stipulating local assembly before a vendor can sell there. We are now studying the experience of the vendor who has already gone in, France's Sagem."

Samsung has just launched the new SGH N100 handset, which will retail for almost Dh1,000. The model is WAP (Wireless Application Protocol) compatible. Regional market share is estimated at 15 per cent, while that in the UAE, it's around 18 per cent.

"WAP will take off only when you have the necessary bandwidth available under GPRS. All Middle East telecommunications service providers are working on trials for GPRS and should commission it in the near term," Singh said.

Eros Electricals, Samsung's UAE distributor, is trying to win greater market share. "We were a little inactive after the launch of the SGH-800, now the new model will drive the volumes higher," said Ranjan Mazumdar, deputy general manager for sales and marketing at Eros.

Samsung was a relatively late entrant to the region's GSM market. Its first models were available only in early 1998. "We have been very aggressive in tackling the grey market activity here. Every time these operators dropped prices on our models, we just hit back by dropping ours. We just did not leave them any room. Our strategy has paid off."