Reliance Jio strategy to bundle 4G with smartphones

As Reliance Jio Infocomm gets set for the commercial launch of 4G services, the company is entering into partnerships with almost all smartphone makers to bundle three months of free data and voice with handsets.

A first for the Indian market, this is seen as a way of ramping up users rapidly while providing a push to smartphone sales, according to an Economic Times report citing two executives aware of the plan.

A deal has been struck with Samsung and sales of the devices have already begun, said a retailer. A pact with Apple is also said to be in the works.

"Reliance Jio's launch will be phased and based on smartphones that have cleared all tests," said one of the sources. "The company expects this strategy will help to instantly build up its consumer base even before the commercial launch expected anytime this year." The scheme will be available across price bands.

While Jio opened up its network to staff and others last year, the company said on 15 July it's in a high state of readiness for a commercial launch. Reliance Jio already has more than 1.5 million subscribers, which includes customers of its Lyf smartphones, employees and business partners including retailers.

Buyers of the bundled devices will get a SIM card that will allow them to access the Jio network immediately. The three months of free data and talk plan will continue if Jio does not commercially launch its services and tariff plans by then.

The bundling deal will be available for all devices that Jio signs up, even those bought before the scheme began.

A senior executive at a leading south India-based cellphone retail chain said Jio's bundling scheme with Samsung has catalysed sales. "Sales of the Samsung handsets which have the Jio bundling scheme has grown by 15-20 per cent since the launch last week," he said.

A report by Morgan Stanley Research said Reliance Jio is expected to have 30 million subscribers by the end of this fiscal year with revenue of over $1 billion.

Meanwhile, in a notice to the National Stock Exchange on 14 July, Jio said it plans to raise Rs15,000 crore through a rights issue to existing shareholders, the foremost being parent Reliance Industries.

The latest fund-raising comes after Jio had raised Rs15,000 crore through another rights issue to existing stakeholders back in January 2016. Jio separately said it has invested some Rs1.34 lakh crore out of Rs1.5 lakh crore for setting up its network, on spectrum and other expenses.

It will spend the rest to expand coverage to 90 per cent of the population over two years from the date of the launch from the 70 per cent it has already achieved. A report by Morgan Stanley Research said Reliance Jio is expected to have 30 million subscribers by the end of this fiscal year with revenue of over $1billion.

The company is currently testing a wide array of 4G voice over LTE (VoLTE) handsets for network compatibility with a focus on dual-SIM models so that a Jio subscription can easily fit in as a second connection, said the people cited above. With this, the company will also be opening up services to smartphones other than its own Lyf brand.

Jio has circulated the bundling proposal to smartphone vendors in India and is finalising the handsets that will support services best. Last week it concluded a deal with Samsung for mid-to-high-end smartphones in the Note, S6, S7 and A series. A deal with Apple for the iPhone is also on the cards, said the people cited above.

Panasonic India's mobility division head Pankaj Rana told ET a clearer picture will emerge in about a week's time. "They haven't given any go-ahead to us as far as the timeline is concerned," he said. Lava and Intex are also said to be discussing a partnership with Jio, although their spokespersons denied any such talks.