Airtel knows “how to deal with Jio Phone Next”, will not take the subsidy route: report

It seems like Airtel is not afraid of Reliance Jio’s upcoming affordable 4G smartphone, Jio Phone Next. The company’s Chief Executive Officer, Gopal Vittal, said that the telco has clarity on “how to deal with this,” referencing Jio Phone Next in an interaction with ET Telecom. He further added, “The Indian telecom market is competitive and we will take several steps using existing capabilities.” The telco is looking to use its previous experience with original equipment makers for making affordable handsets for the Indian market.

Also read: Jio Phone Next could be yours at just Rs 500, here’s how

Airtel not threatened by Jio Phone Next launch

Airtel has already worked along with few banking partners to offering lending options to consumers. To recall, a few years ago, Airtel used to offer EMI options on smartphones bought through offline or online Airtel Store. Vittal said, “We did pilots with a few original equipment manufacturers….so we have clarity on how we deal with this… having said that it is a competitive industry, we will look at what happens in the marketplace through a combination of good marketing optics and capability and platforms around locks.” Jio is said to partner with four non-banking finance companies (NBFCs) for credit support deals worth Rs 2,500 crores.

Sunil Mittal, chairman of Bharti Airtel, added, “So far, our company has been fortunate for 25 years not to spend billions of dollars of subsidy that the world does across the markets. India has escaped that. So far we have not been required to do it.” 

Jio Phone Next is scheduled to go up for sales on September 10th. Reliance Jio expects to sell 50 million units of the Jio Phone Next in the coming six months. The price hasn’t been revealed yet, but the smartphone could cost as low as Rs 5,000 for the Basic model, while the Advanced variant is said to come for Rs 7,000.

The telecom operator is also said to offer a financing scheme to customers. The consumers can pay 10 percent of the full amount during the purchase, and the remaining amount can be paid in instalments.

According to Airtel’s CEO, Gopal Vittal, the entry-level smartphone has a very small market share in the country as consumers are looking for better quality devices that aren’t feasible under a budget of Rs 4,000-Rs 6,000. Upon the matter of subsidizing smartphones, Vittal said, “When the handset comes up for renewal at the end of two years or 30 months, the customer makes the choice all over again to actually use the network of their own choice. As a consequence, to stay in the same place you need to keep subsidizing again and again. Worldover it is not clear if handsets are value disruptive in that perspective.”

According to a report by ET, Bharti Airtel was in discussion with several OEMs in India to develop low-cost 4G smartphones. The telco planned to sell these smartphones either under its own brand or bundle them with the connections. ET suggests that the OEMs included companies such as Micromax, Lava, and Karbonn.