Bharti Airtel, India’s second-largest telecom operator, said that it has its own strategy in place to counter Reliance Jio’s affordable 4G smartphone, JioPhone Next, which will be launched September 10.
The Sunil Mittal-led telecom operator also informed investors that it would not subsidise smartphones to grow its 4G subscriber base and to challenge JioPhone Next. The telco, however, will respond to the competition through various other mechanisms.
Airtel’s chief executive officer, Gopal Vittal, revealed that the telco recently conducted pilot projects with various contract manufacturers and original equipment makers for affordable handsets. Additionally, he informed that Airtel previously offered loans on smartphones through banking partners for customers in the market besides exploring platforms to offer locked-in handsets.
His comments suggest that Airtel could use these options to react to Jio’s latest affordable smartphone.
“The Indian telecom market is competitive and we will take several steps using existing capabilities. We have clarity on how to deal with this,” Vittal said during the investor call this week.
“So far, our company has been fortunate for 25 years not to spend billions of dollars of subsidy that the world does across the markets. India has escaped that. So far we have not been required to do it,” said Sunil Mittal, chairman of Bharti Airtel.
Bharti Airtel was reportedly in talks with domestic contract manufacturers such as Lava, Micromax and Karbon to develop low-cost 4G smartphones to counter JioPhone Next. The phone could be sold either under the telecom operator’s own brand or bundled with its 4G connections.
Explaining Airtel’s stance avoiding the subsidy route completely, Vittal said that when the handset comes up for renewal at the end of two years or so, the customer makes a choice all over again actually to use the network of their own choice. “As a consequence, to stay in the same place, you need to keep subsidizing again and again. World over, it is not clear if handsets are value disruptive in that perspective,” he said.
Further, he said that smartphones priced in the Rs 4,000-Rs 6,000 segment range are only a fraction of the overall market. “…customers look for better quality devices” when they migrate from a feature phone to a smartphone, and the price segment can’t ensure a quality experience.
“…India is a competitive industry, we will look at what happens in the marketplace through a combination of good marketing optics and capability and platforms around locks,” Vittal told the investors.
Mukesh Ambani-led Reliance Jio is aiming to sell 50 million JioPhone Next smartphones in the next 6 months. It has reportedly partnered with five banks and four non-banking financial companies (NBFC) to bring financing schemes for the JioPhone Next, which the telco developed in partnership with internet major Google.
As per various media reports, the JioPhone Next could be priced between $50-$70.
Jio is currently looking to reach the 500 million subscriber mark in the country quickly. It has also signed pacts with Vivo, Oppo, iTel, Samsung, Nokia (HMD) and Xiaomi to roll out ‘Jio exclusive’ or ‘Jio-SIM locked’ smartphones.