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South African firm's phones to be made in Africa, for Africa

By Helen Nyambura-Mwaura

JOHANNESBURG (Reuters) - Millions of mobile phones are shipped to Africa every month, but a South African company hopes to rival the likes of Samsung and Nokia with home-grown smartphones tailored to African needs.

Seemahale Telecoms, which already makes telecommunications equipment in South Africa, is set to build a model that looks similar to Samsung's Galaxy S4 and runs on Google's Android operating system, to sell at around 2,500 rand ($260).

"It just didn't seem right that there are hundreds of millions of phones in Africa, none of which are actually manufactured here," Seemahale founder Thabo Lehlokoe said in an interview.

"Not because of anything other than the fact that everybody tended to think that it is cheaper to do these things in China."

If it seems implausible that an African company with no experience of building phones could compete seriously with established global manufacturers, Seemahale counters that his as yet unnamed phone will fill an unmet need.

A natural big-brand comparison might be the Sony Xperia Go, which has a similarly rated processor and retails for 2,899 rand

($300).

But whereas the Go has a 3.5-inch touchscreen and advertised talk time of up to 6.5 hours, Seemahale's phone will have a 5-inch touchscreen, and Lehlokoe says its 2,250 mAh battery will offer talk time of "over a day".

AFRICAN MUST-HAVES

Those features, says Lehlokoe, are must-haves on a continent where a relative lack of home computers or fixed-line telephones means most people interact with the Internet from their phones.

Moreover, many of them find it hard to charge their devices regularly.

"Longevity of the battery is very important, given our target market. It's not people who have access to power all the time," Lehlokoe said.

Africa already has at least 600 million mobile phones, but the billion-strong population is growing rapidly, as are incomes, and governments are promoting connectivity in the hope that it can speed up delivery of education and health services.

Seemahale has yet to receive any pre-orders - the devices are still undergoing regulatory tests - but Lehlokoe said one South African operator was already testing the phone and another was interested. The phones are designed to be rebranded by operators, with their own logos.

The components will come from Taiwan and China, but the phones will come part-assembled for the first few months, until factory workers are more familiar with the production process.

Eventually, Lehlokoe says, Seemahale has the capacity for a monthly output of 150,000 smartphones or the 10.1-inch tablets that it also intends to produce, retailing for 3,500 rand.

But even an output of 5,000 devices per month could mean 50 to 100 new jobs.

Being prepared to take small orders might give Seemahale an edge in selling to smaller firms that lack the purchasing power of the big mobile operators to secure discounts from the bigger manufacturers.

SMALL BITE OF THE PIE

Lehlokoe hopes a South African government policy that rewards companies for buying from black-owned firms will also work in his favor in his home market. And soon, he hopes to find partner firms to distribute his phones elsewhere in Africa.

According to the telecoms advisory firm IDC research, Africa received shipments of nearly 30 million phones in the second quarter of 2013, a fifth of which were in the smartphone segment.

Young African buyers are as brand-conscious as they are anywhere in the world, but analysts say companies such as Seemahale can still hope for a small bite of the pie if they can price devices attractively.

"It has to be comparable to the mainstream devices," said IDC analyst Spiwe Chireka. "Many will be saying: 'Even if I don't get an S4 - if I have a phone that looks like an S4, I'm still cool, it's still acceptable'."

Other companies are also hoping consumers will embrace handsets made or designed in Africa.

Mauritius-based Mi-Fone is selling basic phones for as little as $12 in countries such as Kenya, Angola, Rwanda and Nigeria. In the Congo Republic, VMK is designing smartphones and tablets for Africa, which are assembled in China.

Despite low wages and high unemployment, African countries have struggled to build manufacturing centers because of a lack of infrastructure and an excess of red tape. Even South Africa, the continent's most developed economy, grapples with low levels of productivity and frequent labor strife.

Lehlokoe hopes his smartphones might help to change that.

"We want Africans to be proud that they can do this themselves," he said, "and not just be consumers of everyone else's solutions."

($1 = 9.8174 South African rand)

(Editing by Kevin Liffey)

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