Nokia signs up Telefonica for mobile Internet deal

[Ironwalt]

UPDATE 1-Nokia signs up Telefonica for mobile Internet deal
Tue Oct 9, 2007 9:00am EDT

(Adds details, analyst, background, shares)

HELSINKI, Oct 9 (Reuters) - The world's top cellphone maker Nokia (NOK1V.HE: Quote, Profile, Research) announced on Tuesday a global deal with telecom group Telefonica (TEF.MC: Quote, Profile, Research), its first operator client for the new Internet services portal Ovi.

Nokia said it would add to its phone menus links to both -- its own Internet services and to the ones of Telefonica.

Telefonica was one of the few European telecoms operators to openly welcome Nokia's planned transformation from a hardware company into an online services company -- threatening to break into a market traditionally dominated by telecoms operators.

"There has been speculation about how operators would take it and seems at least Telefonica is taking it very well," said OKO Bank analyst Hannu Rauhala.

Telefonica's Chief Executive Cesar Alierta and Telefonica O2 Europe CEO Peter Erskine told reporters in London in September that traditional business models were changing in the mobile phone world and Nokia's strategy was interesting and could lead to a greater market opportunity for all players.

"We have good negotiations ongoing with several operators," said Nokia multimedia unit spokesman Kari Tuutti.

Shares in Nokia were 0.1 percent lower at 25.63 euros by 1254 GMT, while Telefonica stock was 0.3 percent lower. (Additional reporting by Kirstin Ridley in London)