To counter Jio, Airtel plans to launch bundled 4G smartphone at Rs 2,500 before Diwali

India’s biggest mobile phone company Bharti Airtel BSE 0.21 % is in advanced talks with handset makers to introduce a 4G smartphone in the lead up to Diwali for about Rs 2,500, bundling large amounts of data and voice minutes with the device to take the battle to Reliance Jio for retaining a share of the mass market.

The 4G device, which will be co-promoted by India’s top telco and the handset maker but not subsidized by AirtelBSE 0.21 %, will be based on the popular Android operating system. Telco will allow users to download all apps available on the Google Play app store, people familiar with the matter told ET.

Jio Airtel plans

The launch is likely around the end of September or in early October.

“Airtel is talking to some handset manufacturers to bring in a smartphone around Rs 2,500, which will have a bigger screen, better camera and better battery performance than what a feature phone could offer,” a senior industry executive aware of Airtel’s plans said.

“Discussions are at a very advanced stage,” the person added.

Sources at handset makers Lava and Karbonn confirmed that they are in separate talks with the telecom market leader for a mass-market 4G smartphone. Spokespersons at Karbonn and Lava declined to comment.

“We don’t comment on market speculation,” a spokesperson for Bharti Airtel said.


Same targets but different strategies

Amid the intensifying battle for data customers, both Jio and Airtel are shifting their focus to the roughly 500 million feature phone users who still use voice services and haven’t upgraded to smartphones for reasons of affordability or the lack of express need. Yet, both telcos are adopting separate strategies, with Airtel battling to protect its share against competition from Jio in this price-sensitive but large market.

Reliance Industries BSE 0.52 % (RILBSE 0.52 %) is offering a 4G VoLTE feature phone locked in with a Jio SIM, and effectively free of tariffs – a Rs 1,500 deposit is returned to the user after three years.

A monthly subscription fee of Rs 153 will ensure unlimited voice and data, allowing access to the Internet and pre-loaded Jio apps, including live TV, cinema, music, Facebook, YouTube, and WhatsApp.

Sources say that RIL could well launch more than one model of the 4G feature phone at attractive price points, adding that these devices could be introduced alongside the staple JioPhone, for which pre-bookings begin from August 24.

The JioPhone hits the market in September.

RIL and Reliance Jio didn’t respond to emailed queries.

Airtel, however, is betting that its low-cost 4G smartphone will provide a better consumer experience through a larger screen, better camera and battery, besides access to all apps on the Google Play store that has a much wider apps ecosystem.

“If true, Airtel’s strategy has the potential to disrupt the market because at the moment, there isn’t a 4G smartphone with good specs at Rs 2,500,” said Tarun Pathak, associate director at Hong Kong-based Counterpoint Research.


Bundled plans give Airtel the edge

Bundled plans with such a 4G smartphone would make a lot of difference as they will act as incentives for a consumer in a market where the average selling price of a 4G smart phone is Rs 11,000, said Faisal Kawoosa, senior analyst at Cybermedia Research.

“It (Airtel’s 4G device) could be a bit democratic because the VoLTE feature phones (JioPhone) being launched are closed loop (with operator Jio), while the smartphone on Android leaves the choice open for users,” Kawoosa added.

To be sure, Navkendar Singh, senior analyst at International Data Corporation (IDC) India, cautioned that ensuring quality consumer experience on a 4G smartphone priced at Rs 2,500 would remain a challenge. “Having good quality screen, battery, and high-speed processor at Rs 2,500 is a challenge… Also, they’re expecting feature phone users who presently spend around Rs 1,000-1,500 to spend extra money to buy a smartphone,” Singh said.

Another industry insider said the smartphone to be launched by Airtel in partnership with a handset maker may well be based on Android Go.

It is a variant of Android announced in May, aimed at regions with slow Internet connectivity and has been designed to work smoothly even on lower-end smart-phones. Google declined to comment for this report.

Counterpoint’s Pathak said the move would be beneficial for Airtel as it will create an additional revenue source triggered by the consumption of data, which is at the heart of the company’s business.

Airtel would be able to generate additional sales without having to manage the end-to-end supply chain of making and selling smartphones.

The partnership would also work for smartphone brands that will benefit from Airtel’s large distribution and retail chain spread across the country, say analysts.


Admin And Senior Editor at E Friends

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