Reliance Jio effect: Airtel to offer cheap Volte smartphones to migrate 2G users to 4G

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Updated: December 10, 2018 6:50:50 AM

According to a senior Bharti Airtel executive, a clutch of device makers are in talks with the company to manufacture such Volte phones.

Currently, only Reliance Jio has fully Volte-enabled 4G network and subscribers.

To meet the challenges thrown up by Reliance Jio, which is fast netting low-end subscribers into its 4G network at a relatively higher Arpu (average realisation per user), Bharti Airtel is exploring launching low-cost Volte (voice over long-term evolution) smartphones. This way the company can migrate its 200 million 2G subscribers to 4G network and free up its 900 MHz band spectrum so that it can be used solely to offer high-speed 4G services.

Currently, only Reliance Jio has fully Volte-enabled 4G network and subscribers.

According to a senior Bharti Airtel executive, a clutch of device makers are in talks with the company to manufacture such Volte phones. However, unlike Jio, Bharti will not offer any subsidy to the manufacturers. Instead it will partner them in a manner that subscribers who buy these phones get some cashback incentives which will effectively reduce the price of the phones. The other difference is that Jio’s Rs 500 phone is a 4G feature phone while Bharti is focussing only on smartphones — it partnered with some OEMs a year back to provide cheaper 4G smartphones. The executive said that such Volte phones will roughly cost around Rs 2,000-2,500, and with cashback-like incentives, the cost will reduce by around Rs 1,000.

 

For every migration of a 2G subscriber to 4G, the upside on Arpu is Rs 30-40 a month, the executive said.

The company’s Volte traffic, which has seen a substantial jump in the last one year, will get a further leg-up due to this initiative. From being negligible in December 2017, today 25-30% of Bharti’s voice traffic moves on its Volte network, the executive said. The target is to take this traffic to around 50% in the next one year. “At 50% of Volte traffic, we will reach the global average,” the executive said.

This way, in the next 3-4 years, the company will totally shut down its 2G network as all customers would have migrated to 4G.

Bharti’s bullishness on converting a high chunk of 2G subscribers to 4G comes from the trends it has noticed in the device market. The company’s share of new smartphone devices on the network has gone up to 40% from 20% a year ago. This means that 40% of the subscribers who are new users of smartphones come to Bharti Airtel. Therefore, if the price benefit is increased the gains will be even more.

As far as 3G is concerned, the shutdown will be faster, which means by March 2020 there will be no 3G, the company official said. Currently, also the 2100 MHz 3G spectrum is being used for 4G services and 3G subscribers are being rapidly moved to 4G.

The company which recently decided to make it mandatory for low-end 2G subscribers to make a minimum recharge of Rs 35 every month, is thinking of raising the floor limit to Rs 50 shortly.

These (around 100 million) users mostly use the phone for only incoming calls and recharge for as low as Rs 10 thus pulling down the company’s Arpu. Bharti has estimated that it will lose around 30-40 million of such 100 million users while the balance will move up the chain. In the process, the company’s network will get cleaned and Arpu will see a rise.

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