PTI ( Press Trust of India) reports that Idea Cellular is on the way to challenge Reliance Jio, by launching a new phone in the market. The phone is said to be priced at Rs. 2,500.

The PTI report informed that the Managing Director of Idea Cellular Limited, Himanshu Kapania, has said,“The practical solution that we are working on is to work with the handset industry and work with them to be able to bring down cost of handsets by bringing down the bill of material, so that the gap of the announced price of Jio feature phone versus a smartphone can be brought down to reasonable levels”.

Currently, the Aditya Birla Group company has joined hands with their rival company Vodafone to manufacture the cheapest smartphone in the market. Earlier, the telecom operators had worked with handset makers when they have faced a challenge by Reliance Infocomm’s cheaper handsets.

Kapania has mentioned that the set will be an “affordable phone” which will permit the consumers to make a choice for dual SIM, selection of 2G and 4G networks, signing up with telecom operators and to use applications of choice. There will be extensive market research on the number of features that can be brought down, operating system and whether it should have a touchscreen, among others.

“With the launch of a 4G feature phone, not only the existing telecom operators will get affected, it will add a big threat to the handset suppliers”, Kapania said, adding that the biggest market of 2G phones will vanish.
Handset manufacturers believe that the scheme will not be strong if there is no support from telecom operators.

Kapania added, “While we have no intention to subsidize handsets, both handset manufacturers and telecom operators need each other to make sure that the offering to the consumer is strong enough when you have to make a choice between a bundle offer and telecom operator with a locked handset”.

The telcos will help the exercise through their domain knowledge, needs of the customers and distribution of channels, he said, adding that the financial help is not needed.

He admitted that margins might be compressed in the procedure for the handset makers, but pointed out that the larger volumes will offset it. For the telcos, bundled plans where they sell handset along with voice and data plan will help to increase the average revenue per user over a long period of time. The telecom operator is also looking at multiple options for constructing its tower assets and will look at all options, including an IPO for Indus Towers.