Demand for entry-level smartphones is expected to surge with telecom operators aggressively looking to bring existing 2G customers on their 4G-powered networks. Industry experts said that a majority of users may be from rural India, as the 4G business models are tied to device-locked sim cards, region-locked devices and tie-ups, and small ticket lending platforms.
“Feature phones have longer shelf life but the pandemic has impacted feature users the most. So, we can expect many to shift to entry-level smartphones. However, the upfront pricing must be closer to the $15-40 range like that of feature phones,” said Tarun Pathak, associate director, Counterpoint Research.
This shift may not happen immediately, as delayed purchases are likely, he added.
Pathak said rather than creating a subsidized smartphone market, if telcos can tap effective partnerships for affordable devices with quality Android experience, they will have better chances to create a new market.
Telecom companies are also working on business strategies to create an ecosystem for new customers and tap into latent demand.
For instance, in an industry-first initiative, Vodafone Idea has strategically partnered with Home Credit India Ltd, a non-bank lender, for a strategic ‘Smartphone for All’ programme, with a ‘handset and telco recharge’ offer, available as an integrated bundled loan.
This unique proposition was primarily based on identification of the ‘new to credit’ customers within the telco’s own base, with the help of big data analytics, to target customers. It allows customers to buy a 4G-enabled smartphone on EMI, and get a 6-month unlimited prepaid plan.
Considering that Indian subscribers, especially in the lower income segment, tend to favour prepaid plans over postpaid, EMI-based sales models may not be effective. However, telecom technology can allow devices to be locked with SIM cards or towers, allowing sellers to keep track of the devices if required.
“We are working on constantly optimizing cost for rural customers. EMI options are available for customers who can’t pay upfront. For that, we have tied up with Home Credit. However, we have seen that majority of customers in this category don’t prefer EMIs. We are in talks with operators to further optimize the costs even with the device lock in,” said Tejinder Singh, product head, Lava International.
Jio has also tied up with Lava, to offer cashback worth ₹2,000 on Lava’s budget 4G phone Z61 Pro. The cashback will be credited in the form of 40 discount coupons of ₹50 each.
Ishita Guha contributed to this story.