Reliance's Ambani Launches Low-Cost Mobile Phone for India--Update

By Newley PurnellFeaturesDow Jones Newswires

India's richest man said Friday that his cellular company has developed an inexpensive, web-enabled mobile phone for the masses, a move that could shake up the handset market and force some of the world's leading phone makers to slash prices to stay competitive.

Mukesh Ambani, the chairman of Reliance Industries Ltd., told attendees at the firm's annual general meeting that the device, which resembles a simple mobile phone but can handle high-speed 4G mobile data connections, will "effectively cost zero," as users will only be required to put down a 1,500 rupee ($23) security deposit, which can be refunded after three years.

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Unlimited mobile data on the phone from Reliance Jio Infocomm Ltd. will cost 153 rupees a month, with free voice calls and text messages.

The "truly revolutionary phone," dubbed the JioPhone, "will transform the lives" of the hundreds of millions of Indians who now use standard, so-called feature phones, he said. The device will offer a physical keyboard rather than a smartphone-like touch screen and allow easier access to the internet through voice recognition to "end digital exclusion in India," he said.

Last year Mr. Ambani started offering cut-rate mobile services to promote his new carrier, which he said now has more than 125 million subscribers.

Market leader Bharti Airtel Ltd. had about 275 million subscribers as of May, according to the Telecom Regulatory Authority of India.

"Reliance can now reach out to the next hundred million users," who are less affluent and need more affordable phones and data, said Tarun Pathak, an analyst at Counterpoint Research.

Competing telecommunications firms have scrambled to slash prices on data in the wake of Jio's launch, with Vodafone Group, another major player in India, saying in March it would merge its embattled Indian business with a local rival, Idea Cellular Ltd.

While they boast large subscriber bases, telecommunications companies in India are contending with average revenues per user of less than $2 a month, a measure that puts it among the world's lowest markets, Telecom Regulatory Authority of India data shows.

The JioPhone's low price and inexpensive data may appeal to many of the approximately 400 million people in India who now use traditional feature phones, said Mr. Pathak.

Consumers pay an average of about $23 for feature phones in India, with many users paying about $2 a month for voice and text messages, according to Counterpoint data. That is in line with the price of Jio's new device, which will include web access and unlimited calls and data.

India's low-end mobile phone market is dominated by phones from South Korea's Samsung Electronics Co. and Indian makers such as Lava International Ltd. and Micromax Informatics Ltd., Mr. Pathak said.

"It's a category where the least amount of innovation has happened," he said, meaning the JioPhone has a good chance of poaching users looking to upgrade.

The JioPhone will be available from September, Mr. Ambani said. He said it would be made in India starting in the last quarter of the year.

Write to Newley Purnell at newley.purnell

(END) Dow Jones Newswires

July 21, 2017 08:54 ET (12:54 GMT)