Mukesh Ambani-led Reliance Jio is offering to buy back from its customers Apple's latest iPhone models after a year's use for 70 per cent of their price as part of a joint strategy to increase Jio's data sales and help the U.S. firm expand in the Indian market. The move also marks a further escalation of the cut-throat competition in the Indian telecom sector and will bring established telcos such as Airtel and Vodafone under more pressure.
California-based Apple is keen to sell more iPhones in India, one of the world's biggest smartphone markets, as growth slows in the US and Chinese markets, but the high price of its mobile handsets has kept the smartphone out of reach of most Indians. Akash Ambani, the son of Reliance chairman Mukesh Ambani, on Friday said the buyback offer would be available on all three latest models - the iPhone 8, 8 Plus and iPhone X.
The offer will be available to Jio customers who buy the iPhone and subscribe to its Rs 799 monthly package for 12 months. This is the first time an Indian telco is offering such a hefty cashback. The announcement was made on Friday at an event to showcase Jio's launch of Apple's latest iPhones in India, The move could help to raise Apple's market share in India from a mere 3 per cent at present, while Reliance Jio could increase its customer base in the high-spending upper class who can afford to buy Apple smartphones.
Apple is already in talks with government make its phones in India and has started assembling its low-cost SE model in the country. The US company is way behind arch rival Samsung which has a 28 per cent share in the Indian smartphone market. Reliance is already eyeing roughly 500 million customers who use basic, low-cost phones through its Rs 2,500 4G phone that enables users to access the Internet but falls short of being a full fledged smartphone.
Jio has already disrupted the country's price-sensitive telecom market and is targeting between 250-300 million customers in the next two years. Reliance is also footing at least 40 per cent of the cost of its basic 4G phone in an aggressive bid to gain customers. The Jio phone, is expected to roll out this week for a refundable deposit of Rs 1,500, will cost at least Rs 2,500 to assemble, according to market sources.
That means Jio will likely carry around Rs 1000 crore in costs for every 10 million Jio-Phones it sells. The company aims to build a subscriber base of between 250 million and 300 million users in the next two years.
The Reliance group has deep pockets and is sitting on huge cash reserves which it can leverage to fight the price war it has unleashed in the Indian telecom sector. Jio's advanced voice over LTE (VoLTE) network only works with 4G enabled devices, inaccessible to many even at subsidised rates. The significantly cheaper JioPhone, however, will open the Internet to a less affluent segment of Indians for the very first time.
Reliance is making a bold attempt with this phone and data will be the key driver for them. Billionaire Mukesh Ambani, who has shaken up the telecom sector with his disruptive free voice calls and cheap data plans, on Wednesday had said 4G telecom coverage in India will surpass that of 2G in a year.
Data is the oxygen of a digital economy. We cannot deprive Indians of this vital life-sustaining resource. We have to provide ubiquitous access to high-speed data at affordable prices, Ambani said at the India Mobile Congress in Delhi. Ambani also said that India has leapfrogged from a lowly 155th in mobile broadband penetration to being the world's largest mobile data consuming nation in just one year.