RCom expands handsets bouquet

Launches colour phones at Rs 999

Mithun Roy & G Seetharaman

MUMBAI: Reliance Communications (RCom) still swears by its strategy of bundling efficient technology with affordable handsets, which has helped it become the second-largest player in the industry today.

Stepping up efforts to further extend its reach into the rural areas, the company on Wednesday launched another colour handset, Classic 732, with a price tag of Rs 999 across its prepaid and post-paid plans.

S P Shukla, president, personal business, RCom, said, “We are pioneers in low-cost handsets. Any attempt at copying the strategy will only result in losing the sharpness.”

Given the pace at which the handsets market is growing, foreign vendors might soon set up manufacturing base in the country, he said.

Nilanjan Mukherjee, chief marketing officer (personal business), RCom said, “The top 10,000 towns are expected to switch to colour handsets with the launch of this handset and there is a huge potential to be tapped in the rural and remote areas. We have massive marketing plans to push our ultra low handsets in the rural market.”

High handset prices are still the biggest barrier for rural customers looking to enter the cellular space and rates need to fall below Rs 500 to enable faster customer addition, a research analyst with Religare Securities said on condition of anonymity.

Though over 8 million new users are entering the sector every month, mobile penetration in the country is just 16% today.

Meanwhile, after its high-profile brand transition, Vodafone Essar is close to launching cheap handsets in the local market under the Vodafone brand. It has plans to launch co-branded handsets sourced from global vendors as well.

Going by industry buzz, the company might launch handsets with a price tag of Rs 666, undercutting RCom’s pricing.
China’s ZTE, which is looking to set up a manufacturing unit in the country, is expected to provide several handset models to Vodafone under a global low-cost handset procurement deal signed between the two companies earlier this year.

Even Huawei Technologies is actively evaluating the option of setting up a manufacturing base in India and is even considering the option of direct retail sales, though no decision has been taken on this yet. Huawei is looking at supplying GSM phones for operators like Bharti Airtel and Vodafone and is expected to launch a slew of products in the local market shortly.

According to industry experts, the refurbished handsets market is already offering handset at prices as low as Rs 500 and these prices could fall further if the prices in the primary market fall further.

Handset makers are striving to contain cost by eliminating certain features, but the major reduction in handset cost is expected to come from the efforts of chipmakers.

RCom is selling nearly 1 million Classic handsets per month, which could rise further with the latest launch. For the youth segment, the company has introduced FM radio capable phones at prices beginning Rs 1,888; for the segment upgrading to colour phones it has a model at Rs 1,234; and for the economy segment, monochrome handsets at Rs 777, Rs 888 and Rs 999, respectively.

According to IDBI Capital, RCom, which had a 17.2% market share in August, is targeting a 21% market share by next fiscal. It plans to add more subscribers through wider coverage, cheap handsets and attractive plans.

The company has lined up capital expenditure of $2.5 billion at home and $1.5 billion overseas over three years. While the domestic capex will be for accelerating network expansion with an eye on launching 3G and WiMax services in future, the overseas capex will be for increasing the capacity of its submarine cables.