Cheap 4G Fea­ture Phones may Help Tel­cos Take on Jio

In­cum­bent tel­cos said to be in talks with In­tex and Mi­cro­max for bundling of­fers

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timesin­ter­ 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


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