Reliance Industries Limited (RIL), the parent company of Reliance Jio, India’s number one telecom operator, will have to spend more on the subsidies it plans to provide to the customers for making JioPhone Next affordable. For the unaware, JioPhone Next is an ultra-affordable 4G smartphone that both Jio and Google have developed together for the Indian market. The expected launch of the smartphone was delayed from September 10 to the coming festive season. There is no fixed date provided for the launch.
Coming back to the primary point, RIL will have to spend thousands of crores in addition to what it had planned for spending on subsidies to keep the device affordable for the customers.
Rising Component Prices Major Issue for JioPhone Next
JioPhone Next is not going to be affordable if Reliance doesn’t increase subsidies. An analyst, at the condition of anonymity, told ET Telecom that if Jio plans to price the JioPhone Next around Rs 4,000 and also sell 75 million units, it will have to increase the subsidy per handset to Rs 2,500, which will mean Rs 18,750 crores overall.
The reason why Reliance Jio will have to spend more on subsidies is the rising cost of smartphone components. From chipsets to displays, everything has become more expensive because of the supply constraints that the pandemic has brought. The high cost of components is expected to be there for another year as the demand isn’t going to go down, and it will take some time for new manufacturing facilities of components to start working.
According to the publication, another analyst said that Jio could also go with the ‘Buy now, pay later’ scheme. The company can price the upfront cost for the consumers very low, and the rest of the amount can be paid at a later date in pieces or together.
JioPhone Next is aimed at reducing the legacy network consumers in India. It will be really interesting to see if it can do that.