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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 retail-to-refining conglomerate will offer a data-enabled feature phone for 1 500 rupees ($23) starting August 15, he told shareholders in Mumbai on Friday. The Reliance Jio Infocomm handset, or JioPhone, will come with tariff plans as low as 23 rupees for two days or 153 rupees monthly.

“JioPhone made a splash at the Reliance AGM on Friday as Mukesh Ambani took the covers off the long-rumoured 4G feature phone. The handset, introduced as “India ka Smartphone” and launched at an “effective price” of Rs. 0 (though buyers will have to shell out a refundable, upfront deposit of Rs. 1,500 for the device). JioPhone will be crucial for the company in tapping the estimated 50 crore feature phone users who have not been able to join the Jio 4G bandwagon because of the high costs associated with smartphones.”

“Although Reliance Jio launched in India in September, the company’s offering has been restricted to smartphone users as it is a 4G only network, and to make calls, a phone has to support the VoLTE technology, which is usually not found on basic phones. The company aims to change that with the JioPhone, which comes with 4G VoLTE support. The JioPhone will include access to apps like JioCinema, JioTV, and JioMusic.”

Bharti Airtel, India’s largest operator, fell 4.1%, the biggest intraday loss in four months, as of 14:38 in Mumbai. Idea Cellular, which has agreed to merge with Vodafone’s local unit to create the No. 1 carrier, sank 7.3%. Bharti Airtel and Idea didn’t immediately respond to emails seeking comments.

“Voice will always be free on the JioPhone,” Ambani said at a shareholders’ meeting in Mumbai. “Jio will give users access to unlimited data on the JioPhone.” The data access will start August 15, he said.

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.

Jio’s business practices will allow the upstart “to use its muscle power and price its services in a predatory manner to kill the rest of the industry and create a monopoly,” Bharti Airtel said in a July 20 statement.

Reliance is said to be in talks with I-phone assembler Foxconn to manufacture a mobile handset, ET Now said in a Twitter post on Friday citing unidentified people familiar with the talks. The tweet didn’t say whether the tie-up is for the JioPhone.

The phone is “effectively free,” said Ambani, because the initial 1 500 rupee payment can be refunded after three years if the phone is returned.


Sources: Bloomberg News
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