Idea Cellular, India's third largest telecom operator, is said to be working with handset companies to bring down the cost of handsets to as low as Rs 2,500. The move is aimed at countering Reliance Jio's latest 4G feature phone, JioPhone, which is priced at Rs 1500. The Aditya Birla Group-led company, however, clarified that it will not subsidize the handset like Jio is doing with JioPhone.
Idea Cellular like Reliance Jio used to offer own-branded smartphones bundled with data and voice services. However, it stopped offering devices last year. Besides, players like Bharti Airtel and Vodafone have been offering bundled offerings with new handsets to bring new customers on board.
"The practical solution that we are working on is to work with the handset industry and work with them to be able to bring down cost of handsets by bringing down the bill of material, so that the gap of the announced price of the Jio feature phone versus a smartphone can be brought down to reasonable levels," Idea Cellular Managing Director Himanshu Kapania informed analysts during an earning calls on Friday.
"...our belief is that we need to work with the handset industry and introduce similar phones in the marketplace," he said.
Kapania said that JioPhone also poses a great challenge to the handset suppliers as it will severely impact the 2G feature phone market, which is still significant. He said that handset makers believe the proposition will not be strong enough if there is no support from telecom operators.
The so-called "affordable phone" will allow customers the choice of dual SIM, selection of 2G and 4G networks, signing up with telecom operators of choice and to use applications of choice. Kapania said that an extensive market research would be done on the features that can be excluded to bring the cost down.
The top executive said that both handset manufacturers and telecom operators need each other to make sure that "the offering to the consumer is strong enough when you have to make a choice between a bundle offer and telecom operator with a locked handset."
Kapania said that handset bundling would help Idea increase the average revenue per user over a longer term.
Idea Cellular will launch voice over LTE or VoLTE service on its 4G LTE network by early calendar year 2018. It also revealed that it would deploy a 4G network using 2300 MHz and 2500 MHz spectrum band in five of its leading markets during the current financial year.
Idea Cellular is looking at multiple options of monetizing its tower assets and will look at all the possibilities, including an IPO for Indus Towers.