4G smartphones may cost just Rs 500 very soon

If you have been looking to buy a smartphone to be part of the digital revolution but can't afford one, there's some positive news for you.

Bharti Airtel, Vodafone India and Idea Cellular are working with handset companies to make cheaper 4G smartphones, costing as low as Rs 500 effectively, reported Economic Times.

The telcos are planning to offer users bundled voice and data plans for Rs 60-70 a month.

"We will gear towards low-cost smartphones via alliances. Smartphones are expected to become cheaper, so for an offering with them, it makes more sense than setting up our own phones," an executive at one of the telcos told the paper.

The move is likely to counter Reliance Jio's latest Rs 49 a month plan for JioPhone users, whose effective cost is Rs 0.

ET quoted an executive at another operator saying that their aim is to lower the effective prices of smartphones to the level of feature phones. If possible, bring it down further with bundled data and voice packages and cashback offers.

An executive at a smartphone maker told the paper cost of making an affordable VoLTE feature phone is around Rs 800, which is more than a JioPhone. Therefore, it would be challenging for telcos to bridge that gap with offers alone.

"There will have to be a subsidy involved on feature phones, which they won't be able to give, so the better option is to go for low-cost smartphones," the executive told the paper on condition of anonymity.

Bharti Airtel, Vodafone India and Idea Cellular declined comment.

India has billion-plus mobile subscribers, of which, about 65-70 percent are feature or basic phone subscribers typically use 2G voice services. The telcos' target subscribers account for nearly 50 percent of the telecom sector's revenue.

Analysts believe that the telcos are hoping to retain their users and upgrade them to smartphones to increase data consumption in the medium to long term, however, low-cost smartphones bundled with voice and data plans will hurt average revenue per user (APRU) in the near term.

Rajan Mathews, Director General of the Cellular Operators Association of India, told the paper that bundling smartphones with data and voice plans is a better option considering the revenue pressures for bringing a new feature phone and subsidising it.

"They will have to revise pricing, may not go head to head, but could bring in plans for phones starting from Rs 60-70 range," Mathews told the paper.