Ambani gives JioPhone for free

Airtel shares fell as much as 4%, the most intraday in 4 months, before closing 2% lower at Rs 411.15 on BSE after RIL revealed its JioPhone plans at its 40th AGM

​Mumbai: The Indian tycoon who punched his way into the country’s mobile phone industry by starting a carrier with free services took another swing at rivals, unveiling a cheap feature phone with access to unlimited data. Competitors’ shares plun­ged.

The wireless unit of billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) will offer a data-enabled feature phone for Rs 1,500, he told shareholders in Mumbai on Friday. The Reliance Jio Infocomm handset, or JioPhone, will come with tariff plans as low as Rs 23 for two days or Rs 153 monthly. For smartphone users, the monthly plans start at Rs 309.

However, while data limits are capped on smartphones, feature phone users will have access to unlimited 4G data.

The phone is “effectively free,” said Ambani, because the initial Rs 1,500 payment can be refunded after three years if the phone is returned. Reliance is said to be in talks with I-phone assembler Foxconn to manufacture a mobile handset, according to sources.

Mukesh Ambani told the 40th AGM that JioPhone will be available for user testing in beta from August 15 and for pre-booking from August 24. Ambani said his firm was looking to roll out 5 million phones every month. “Voice will always be free on the JioPhone,” Ambani said at the meeting. “Jio will give users access to unlimited data on the JioPhone.”

Bharti Airtel India’s largest operator, fell as much as 4%, the most intraday in four months, before closing 2% lower at Rs411.15 in Mumbai. Idea Cellular, which has agreed to merge with Vodafone Group Plc’s local unit to create the number one carrier, sank as much as 7.3% before closing at Rs91.90, lower by 3.11%.

A revolution
In fact, this is a sort of revolution in the communication sector. First, the JioPhone has no precedent. Nowhere in the world has a 4G-enabled feature phone been offered at a price tag of Rs 1,500 — refundable after three years that too. Second, Jio has identified a market segment that garners least attention from phone manufacturers.

Third, there is the JioPhone and then there are the Jio apps — all bundled into one. Fourth, Jio is doing to telecom what Hindustan Unilever did to FMCG with sachet pricing. Fifth, it plans to disrupt television viewing as well.

The move by Ambani, India’s richest person, opens a new front in a price war that is already prompting consolidation within a debt-strapped industry that includes 11 carriers. Rivals have cried foul against Jio’s tactics and have blamed widening losses on the new entrant.

India Ka Smartphone for the nation
It’s famously said that India lives in her villages. About 67 per cent of India’s 1.34 billion people reside in rural areas, according to World Bank estimates. 400-500 million of them still use feature phones. While the feature phone market is declining world over, it continues to grow in India.

Consumers in rural India upgrade from one feature phone to another. The smartphone revolution has eluded them. “Either they can’t afford a smartphone or they aren’t aware of the new technology or they don’t need it,” Tarun Pathak of Counterpoint Research tells BGR India.

“Despite this, feature phones as a segment has seen the least amount of innovation in the last 10 years.” JioPhone is neither a smartphone nor a conventional feature phone. It lies somewhere in between.