Retail News

Apple, Reliance deal to subsidise iPhone buy

Retai News : Apple Inc seems to have finally cracked the mobile handset subsidy model in India. The world’s second largest smartphone maker has signed a deal with Reliance Communications which allows users to buy the new 16GB iPhone 5c and iPhone 5s at zero initial cost (or, upfront fee). The telecom company will offer unlimited voice calls, SMS and 3G data for a fixed monthly fee ranging between Rs 2,500 and Rs 2,800. The subscriber will be locked-in to RCom’s network under a two-year contract.

This is the first time an Indian telecom company is subsidising an iPhone, although Apple has been trying to convince operators for a while. Indian operators have so far stayed away from this model fearing that subscribers may dishonour the contract by unlocking the phone for use on another operators’ network or for reselling it in the grey market. Since more than 90 per cent of the Indian mobile phone market use pre-paid cards, operators have been wary of tracking down defaulters.

RCom has dealt with the problem by restricting the subsidy offer to credit card users, thus putting the onus of subscriber verification on partner banks, including ICICI and HDFC. When contacted, an RCom spokesperson declined to comment but industry sources said that the company will announce the offer soon.

Offer rates

Under the scheme, the 16 GB iPhone 5C, priced without subsidy at Rs 41,900, will be available for a monthly fee of Rs 2,500 while the 5S, priced at Rs 53,500 will be on offer for around Rs 2,800 a month. The 32 GB version will come with an upfront fee of Rs 10,000 in addition to the monthly charges. The 64GB model, priced at Rs 71,500 off the shelf, will be on offer for an upfront fee of Rs 18,000.

While the iPhone is also available on equated monthly instalments, RCom has sweetened the deal by bundling in unlimited voice and data plans along with the device for a two-year period. According to one market estimate, there are close to 4 million subscribers in India who spend more than Rs 1,500 a month on phone bills. So even though one ends up paying much more than the cost of device over a two-year period, the user will get services as well. Rival operator Airtel will also start selling the new iPhones from November 1 but the company is unlikely to offer a subsidy.

Globally, this Apple model has met with huge success. For example, AT&T is offering a plan where the new iPhone model can be taken for $27 a month under contract. This method of doing business has proven to be beneficial to all stakeholders. While users get to buy expensive iPhones at lower upfront costs, the telecom operator gets additional revenues from customers by bundling its services with sales of the the device.

This is the first time an Indian company is subsidising an iPhone, although Apple has been trying to convince operators for a while.

Source : thehindubusinessline


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