Reliance Jio is said to be subsidising approximately 40 percent of the cost of its 4G feature phone, JioPhone. Two sources have informed Reuters that while the JioPhone is being offered at Rs 1,500, it will cost at least Rs 2,500 to assemble. They further said that the company is risking recovery of its investments by trying to garner millions of customers.
The report states that Jio aims to build a subscriber base between 250 million and 300 million users in the next two years. The JioPhone is the company’s attempt to tap into 500 million feature phone users in the country. “The 3,000-rupee smartphone was not cutting it," the second source said. "Reliance is making a bold attempt with this phone and data will be the key driver for them."
According to analysts, major Indian feature phone users have an average revenue per user (ARPU) of Rs 50 or lower. JioPhone aims to increase this ARPU with its minimum monthly plan of Rs 153, the first source said.
JioPhone was announced by Mukesh Ambani at Reliance Industries' AGM on July 21. Consumers need to pay a sum of Rs 500 while pre-ordering the device and a remaining sum of Rs 1000, when they receive the phone. After three years, users will be refunded the entire amount if they submit their JioPhone back to the company, thus making the device effectively free for consumers.