India’s richest man has increased the pressure on Vodafone by announcing plans for Jio, his telecoms venture, to launch free smartphones, intensifying a brutal price war in the country’s huge mobile market.
Speaking as Vodafone revealed a 13.9 per cent plunge in its Indian revenues in the three months to June 30, Mukesh Ambani said yesterday that the new 4G-enabled phone would be available from September for all customers who pay a deposit of 1,500 rupees (about £18). The money will be refundable after three years.
“This breakthrough device, named Jiophone, along with Jio’s disruptive tariff, will unleash the power of digital life in the hands of 1.3 billion citizens of the largest democracy in the world,” Mr Ambani said at Reliance Industries’ annual meeting in Mumbai. Mr Ambani has invested more than $30 billion in Reliance Jio, building a new mobile phone business in India, the world’s second biggest market by subscriber numbers.
He has rattled rivals by offering free services and cut-price tariffs in an attempt to attract hundreds of millions of customers.
The new Jiophone is the tycoon’s latest effort to steal market share from established rivals, including Vodafone and Bharti Airtel. Jio, which is backed by Reliance’s huge petrochemicals business, has attracted about 125 million subscribers since it was launched last year.
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Nitasha Shankar, head of research at Yes Securities in Mumbai, said that the new phone would act as a “disruptive force” for India’s telecoms industry, “which is already reeling under pricing pressure in response to Jio’s aggressive plans”.
Founded by his father, Dhirubha, in 1961, Mr Ambani’s Reliance Industries is one of India’s most powerful business groups and is recycling profits from its other ventures to carve out a lucrative position in the telecoms sector.
Vittorio Colao, Vodafone’s chief executive, said that it was “too early” to determine what the impact of the new phone would be on the sector.
Shares in Idea Cellular, with which Vodafone is trying to merge its Indian operation, fell 6 per cent after Mr Ambani’s announcement. Shares in Bharti Airtel, another rival, also fell sharply.