Mukesh Ambani bets on $12 phone to disrupt India’s old internet network

BLOOMBERG

Billionaire Mukesh Ambani’s group announced an internet-enabled phone at an entry price of 999 rupees ($12) as the oil-to-retail conglomerate seeks to poach more budget device users from rivals to its growing consumer offerings.
India’s No 1 wireless carrier Reliance Jio Infocomm Ltd will start beta trials for the first 1 million ‘Jio Bharat’ phones from July 7, according to a statement by the telecommunications unit of Reliance Industries Ltd. The phones, amongst the cheapest in India, will be offered with unlimited voice calls and 14 GB of data for 123 rupees a month. The device can also stream videos from Reliance’s JioCinema and make payments.
The launch of a cheap internet-enabled phone is another disruptive move by Ambani, who deployed a similar cut-throat strategy when he entered the retail business in 2006 and telecoms in 2016, elbowing out competition until Reliance emerged as the market leader in both sectors.
Akash Ambani, chairman at Reliance Jio, said in the statement that there are 250 million mobile phone users in India who remain “trapped” in the 2G era, unable to tap into basic features of the internet at a time when the world is adopting 5G technology.
The phone is also expected to boost Reliance’s plans to make a push into entertainment with its streaming service. Reliance Jio plans to invest $25 billion to roll out 5G services across India by December 2023.
Jio’s new phone is priced at 20% lower than the estimated average selling price of feature phones in India, according to equity analysts Akshat Agarwal and Ankur Pant at Jefferies India Pvt Ltd. They estimated as much as 22 million budget device users would be enticed to switch to this cheaper option and that could lead to the country’s No 2 wireless carrier Bharti Airtel Ltd losing 11 million subcribers a year.
Bharti’s shares fell as much as 2.9% in early trade, posting the deepest intraday losses since June 1.