Reliance Industries turns to China for cheaper mobile technology

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Reliance

To secure cut-price phones that could be sold in packages from $30, Reliance Industries is in talks with China, as it seeks to repeat the low-cost revolution it unleashed with its first dip into India’s mobile market a decade ago.

Industry sources said Reliance, aiming to roll out 4G service shortly, has been talking to Chinese firms such as Gionee, Huawei and Xiaomi.

Reliance has spent $13 billion on the 4G Reliance Jio push in the past five years that will mark its return to telecom, but it has faced many delays as it completes the network. It is also faced with absence of cheap devices opening access to its services, making these Chinese deals critical.

“(Jio) will go for the kill from the start,” said Neil Shah, research director, Counterpoint Technology Market Research. “They want to go for mass market play with 4G for only that will give them the scale to be profitable.”

The company’s return to telecom could be a game-changer in India, where only one out of 10 currently use smartphones.

Internet users are likely to triple to 550 million by 2018, as per the Boston Consultancy Group If successful, it will mark a personal victory for Mukesh Ambani, Reliance’s chairperson.
Anil’s Reliance Communications said last year it would also offer 4G from 2015, pitting the duo head-to-head for the first time since a non-compete pact ended in 2010.

Attracting consumers with cheap phones is a strategy used before by Reliance, whose founder, patriarch Dhirubhai Ambani, once vowed to make phone calls “cheaper than a postcard”.

Reliance wants to repeat the feat with 4G, thanks to China’s cheap smartphones, tablets and pocket routers.

“Their internal target is to have five million customers in 50 hours,” a person familiar with the matter said.

While the company unlikely to subsidise devices directly, industry sources say it could attract users with a payment of Rs 2,000 to Rs 3,000, or roughly $30 to $45.

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