Cheap 4G Feature Phones may Help Telcos Take on Jio
Incumbent telcos said to be in talks with Intex and Micromax for bundling offers
timesinternet.in New Delhi: The launch of Intex’s 4G VoLTE feature phone at under ₹ 2,000, likely to be followed by a slew of similar devices, could open up avenues for incumbent telcos to take on Reliance Jio in the battle for 2G users by forming voice and data bundling partnerships, say experts. Intex’s new feature phone, priced at ₹ 1,999 and hitting the market by Diwali, compares with the Reliance Industries’ 4G featurephone — JioPhone, which will be available at one-time refundable price of ₹ 1,500 in September. Micromax has also said it will launch its own 4G VoLTE featurephone — Bharat 1 — at ₹ 1,999.
While JioPhone is locked to the Jio service, the other two are open phones which can be used with any service provider. Incumbent telcos are believed to be in talks for bundling offers with both. Chipmaker Spreadtrum Communications has also said it is talking with handset makers to bring in 4G featurephones costing around ₹ 1,500.
“Incumbents are expected to face immense challenges in retaining their high ARPU (average revenue per user) feature phone user base and acquiring new customers as well, considering JioPhone launch,” IDC India’s senior analyst Navkendar Singh said. Any partnership with vendors like Intex for its 4G featurephone will give a good opportunity to telcos like Bharti Airtel, Vodafone India and Idea Cellular to offer its users “a value proposition as part of efforts to retain their 2G users, especially those at the higher feature phone ARPU bands”, Singh said.
A person familiar with the matter said Vodafone and Bharti Airtel are driving discussions with handset vendors for bundling voice and data services with 4G VoLTE feature phones ahead of the availability of JioPhone.
“The discussions have picked pace following the announcement of open market 4G VoLTE feature phones by these vendors in India,” the person said. According to IDC, 4G featurephones are expected to make up more than 15% of the annual feature phone shipments for 2017, on the back of JioPhone and expected launches by other vendors. Counterpoint estimates 24 million 4G featurephones shipments by the end of this year.
The three telcos besides Intex and Micromax didn’t respond to emails seeking comment.
Tarun Pathak, associate director at Counterpoint Research, said it is important for the incumbents to respond to JioPhone as India is estimated to add half a billion new internet users in the next five years with most of them coming from rural India where internet penetration is a low 15%.
“These users, if acquired by Reliance Jio, will undergo major data consumption, a large pie of which will be enjoyed by Jio, including its services. Hence, top operators must make sure to retain these users or upgrade them to their plans and services,” Pathak said. “Having said that, it will be a tough task to challenge the aggressive offering of Jio at this point.” Rohan Dhamija, partner and head for India and South Asia at Analysys Mason, however, said top telcos’ move to bundle services with 4G feature phone would only make sense if provisioning of service is comparable to Jio’s offer.
“Jio is doing this because the cost of provisioning of service is low since it uses VoLTE to deliver voice, but top telcos are not using VoLTE currently. It doesn’t make economic sense if provisioning of the service is high,” Dhamija added.
Intex’s new feature phone, priced at 1,999, while Micromax is said to launch its VoLTE feature phone at 1,500