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RIL turns to China to reprise cheap phone revolution in India

Reliance Industries (RIL) is in talks with Chinese manufacturers to secure cut-price phones that could be sold in packages from $30, as it seeks to repeat the low-cost revolution it unleashed with its first dip into India’s mobile market more than a decade ago.

Industry and company sources said RIL, which aims to roll out India’s first national 4G service in the coming months, has been talking to groups including Gionee, Huawei and Xiaomi, as Chinese firms also seek a platform to build their presence in a lucrative and growing market.

RIL has spent $13 billion in the last 5 years on the 4G Reliance Jio push that will mark its return to telecom sector, but it has faced a string of delays as it completes its network. It has also been faced with the absence of cheap devices opening access to its services, making these Chinese deals critical.

“(Jio) will go for the kill from the start,” said Neil Shah, research director at Counterpoint Technology Market Research.

“They definitely want to go for mass market play with 4G, because only that will give them the scale to be profitable.”

RIL’s return to telecoms could be a game-changer in India, where only one in 10 people currently use smartphones but with a population of 1.3 billion where the majority of people already access the Internet through mobiles.

Internet users are expected to almost triple to more than 550 million by 2018, according to the Boston Consultancy Group: more than the population of Western Europe.

If successful, it will also mark a key personal victory for Mukesh Ambani, RIL’s chairman. With Reliance Jio, India’s second-richest man will be returning to telecom sector for the first time since he and brother Anil split the family business after a bitter feud, with Mukesh ceding the telecom arm.

Anil’s Reliance Communications said last year it would also offer 4G from 2015, pitting the two head-to-head for the first time since a non-compete agreement ended in 2010.

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