The Indian Telecom industry was not anything like it is today a little over a year ago.Reliance Jio’s entry changed the prospect of what had been a stagnant industry. Telcos are now fighting tooth an nail to keep up with the changing trends, and the latest effort by incumbents to bring 4G smartphones that are cheaper than feature phones is a marker of how dedicated they all are. Indian has billion-plus mobile subscribers, of which, about 65-70 percent are feature or basic phone subscribers typically use 2G voice services. The telcos target subscribers account for nearly 50 percent of the telecom sector’s revenue.
Airtel, Vodafone and Idea Cellular were impacted by Reliance Jio’s entry into the Indian telecom market, and then the JioPhone’s launch made the competition fierce. After taking countermeasures against the JioPhone by offering bundled voice and data with cashback on low-cost smartphones considerably cheaper than feature phones, Economic Times reported.
If the information is accurate, we could see 4G-enabled smartphones for as low as Rs 500. And the telcos will bundle those phones with data and voice packages costing anywhere between Rs 60-70 per month. This is a bold step by existing telcos in order to outperform Reliance Jio’s disruptive moves, be it with JioPhone or low-cost tariffs.
“We will gear towards 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”, ET quoted an executive at one of the telcos as saying. In an effort to make its JioPhone appealing, the telco also revised its monthly plan to offer unlimited voice and 1GB data for 28 days at just Rs 49 instead of Rs 153.
The latest effort by existing telcos, as reported by ET, is a direct blow to Jio’s efforts in targeting the majority of mobile subscribers in India. In a country with a total of more than a billion mobile users, up o 70 percent still use feature phones. This massive chunk contributes 50 percent of the telecom industry’s revenue. It only makes sense to retain them with fierce action plans, analysts note. But making affordable 4G smartphones with low-cost tariffs will certainly work in favor of the incumbents, Analyst note that such an aggressive move can hurt telco’s average revenue per user, but also help them retain their users.