Airtel, Vodafone and Idea to make Rs 500 smartphone to outsmart JioPhone

Telecom companies Bharti Airtel, Vodafone and Idea are in talks with phone makers to make 4G smartphones available at mere Rs 500 to compete against Jiophone.

It is slated to offer users with attractive bundled voice plans for Rs 60-70 per month against Jio Rs 49 plan. The trio aims to take up their average revenue per user (APRU) to increase data consumption in the long term, said an ET report.

APRU has been a big worry for the telcos competing against Jio. Airtel and Vodafone APRU have gone down to Rs 145 and Rs 146 per month from a year ago levels of close to Rs 200 each. In comparison, Reliance Jio claims an ARPU of Rs 156 a month.

Incumbent players have already been witnessing down in revenue and profitability. The move will allow them to gain the sliding market share.

We will gear towards offering low-cost smartphones via alliances. Smartphones are expected to become cheaper, so for an offering with them, it makes more sense than setting up our own phones, an executive of one of the telcos said in the report.

Notably, feature phone subscribers contribute 50 per cent of the telecom sector's revenue.

According to industry experts, telcos need to have a strategy in place to survive in a long-term and with collaboration it is feasible. An affordable VoLTE feature phone costs about Rs 800-1000. It would be challenging for telcos to bridge that gap with offers alone.

Rajan Mathews, director general of the Cellular Operators Association of India, said that telcos may need to revise pricing, bundling smartphones with data and voice plans is a better option.

Besides, in partnership with Flipkart, Vodafone has also been offering 4G smartphones at an effective price of Rs 999. Micromax also has announced a smartphone based on Google's operating system, which is likely to be available in March at under Rs 2,000.

Meanwhile, in term of users, Airtel still has the biggest subscriber base at over 289.53 million (24.91 percent market share) followed by Vodafone with 211.02 million (18.15 percent market share). Idea has the customer base of around 194.06 million (16.69 percent market share). At present, the customer base of Reliance Jio has touched 160 million.

Soon after Jio jumped into the telecom market with aggressive voice and data offerings, telcos had complained about its predatory practices. Airtel's Sunil Mittal had in an interview said that Jio unethical practices would not have been tolerated in any other part of the world.

Reliance Jio journey to Jiophone

After Reliance Jio launch in Septemeber 2016, which is claimed to have disrupted the telecom industry through its offers of free voice calls and cheap data tariffs, the company has turned profitable within 17 months. Jio posted a net profit of Rs 504 crore compared with a loss of Rs 271 crore in the preceding quarter.

RIL Chairman Mukesh Ambani had announced next leap for the company, JioPhone, with effective zero price, at the 40th annual general meeting of parent RIL last year.

Out of the 78 crore phones in India, Ambani said, 50 crore are feature phones. It would give ‘affordable’ device to users and ‘end the digital exclusion in India’. About 60 lakh people pre-booked the smartphone in the first phase.

In December, Jio relocated manufacturing units to India from China fearing to miss its sales target due to slow manufacturing.

Recently, Jio claimed to have surpassed Samsung in the segment for the first time. The company plans to push five million phones to the market each week. The company has gained resumed per-booking the Jiophones. Two months ago, Jio relocated manufacturing units to India from China fearing to miss its sales target due to slow manufacturing. The company also plans to go for an IPO by late 2018.

In the battle survival and gaining more user base, who will survive is hard to tell. But one thing for sure these affordable offerings will serve as a double bonanza for the customers.