Reliance Industries Ltd has devised an interesting way of re-entering the telecom sector. The company is looking at tying up with mobile operators to retail their services by bundling handsets with free airtime and insurance. At present, the company sells mobile handsets and insurance schemes at its retail outlets.
Globally, retail giants like Wal-Mart sell handsets bundled with free airtime.
Telecom industry watchers feel RIL?s foray into telecom using this route will spark another price war in a throwback to 2003, when the erstwhile Reliance Infocomm in the undivided Ambani business empire had set 40 paise as tariff for an STD call.
Since regulations do not allow re-selling of airtime, RIL would have to become the dealer for existing service providers to offer this kind of service. Company executives said, though the non-compete clause between the Ambani brothers restrained RIL from directly entering the telecom sector until 2015, nobody can stop the company from retailing handsets bundled with free airtime.
The company uses a huge retail network like Reliance Freshstores, Reliance Digital and Reliance Hypermarket to sell handsets on a pan-Indian scale. Mobile phone operators stand to benefit from this move because such a linkage will increase their subscriber base in a market that is witnessing cut-throat competition among the top four service providers.