<p>Reliance Industries' telecom upstart Jio is footing at least 40% of the cost of its basic 4G phone, two sources familiar with the matter said, as it bets on recovering the investment by luring in millions of new customers.<br /><br />The JioPhone, rolling out this week for a refundable deposit of Rs 1,500 ($23.05), will cost at least Rs 2,500 ($39) to assemble, the sources told Reuters.<br /><br />That means Jio will likely carry more than $150 million in costs for every 10 million JioPhones it sells.<br /><br />And the company aims to build a subscriber base of between 250 million and 300 million users in the next two years, said one of the sources.<br /><br />Reliance Industries did not respond to a request for comment.<br /><br />Some Reliance investors may flinch at the cost of subsidies, but the scale of the outlay is a clear signal of the level of Jio's ambition, as it targets an audience of some 500 million who still cannot afford smartphones in India.<br /><br />Jio's advanced voice over LTE (VoLTE) network only works with 4G enabled devices, inaccessible to many even at subsidised rates. The significantly cheaper JioPhone, however, will open the Internet to a less affluent segment of Indians for the very first time.<br /><br />"The Rs 3,000 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."<br /><br />Analysts estimate a majority of Indian feature phone users have an average revenue per user (ARPU) of Rs 50 or lower. JioPhone's Rs 153 monthly plan for so-called pre-paid users aims to drive up this ARPU, the first source said.<br /><br />Jio, backed by India's richest man Mukesh Ambani, has amassed more than 12.8 crore subscribers since its launch last year, by offering free voice and cut-price data for months.<br /><br />Over half a dozen wireless carriers compete for market share in major Indian cities, but Reliance, the first source said, sees the telecom market being winnowed down into a three player market with just Jio and current leader Bharti Airtel and the Vodafone-Idea combine likely left standing.<br /><br />The JioPhone is currently being manufactured in China, based on a unit reviewed by Reuters, but Reliance is likely to tap the likes of Foxconn and Flextronics, which have facilities in India - to assemble it in the country, a Reliance executive told Reuters previously.<br /><br />The phone's chipset, being supplied by Qualcomm and China's Spreadtrum, is likely to be its most expensive component while batteries are likely to cost $3-$4, the first source said.</p>
<p>Reliance Industries' telecom upstart Jio is footing at least 40% of the cost of its basic 4G phone, two sources familiar with the matter said, as it bets on recovering the investment by luring in millions of new customers.<br /><br />The JioPhone, rolling out this week for a refundable deposit of Rs 1,500 ($23.05), will cost at least Rs 2,500 ($39) to assemble, the sources told Reuters.<br /><br />That means Jio will likely carry more than $150 million in costs for every 10 million JioPhones it sells.<br /><br />And the company aims to build a subscriber base of between 250 million and 300 million users in the next two years, said one of the sources.<br /><br />Reliance Industries did not respond to a request for comment.<br /><br />Some Reliance investors may flinch at the cost of subsidies, but the scale of the outlay is a clear signal of the level of Jio's ambition, as it targets an audience of some 500 million who still cannot afford smartphones in India.<br /><br />Jio's advanced voice over LTE (VoLTE) network only works with 4G enabled devices, inaccessible to many even at subsidised rates. The significantly cheaper JioPhone, however, will open the Internet to a less affluent segment of Indians for the very first time.<br /><br />"The Rs 3,000 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."<br /><br />Analysts estimate a majority of Indian feature phone users have an average revenue per user (ARPU) of Rs 50 or lower. JioPhone's Rs 153 monthly plan for so-called pre-paid users aims to drive up this ARPU, the first source said.<br /><br />Jio, backed by India's richest man Mukesh Ambani, has amassed more than 12.8 crore subscribers since its launch last year, by offering free voice and cut-price data for months.<br /><br />Over half a dozen wireless carriers compete for market share in major Indian cities, but Reliance, the first source said, sees the telecom market being winnowed down into a three player market with just Jio and current leader Bharti Airtel and the Vodafone-Idea combine likely left standing.<br /><br />The JioPhone is currently being manufactured in China, based on a unit reviewed by Reuters, but Reliance is likely to tap the likes of Foxconn and Flextronics, which have facilities in India - to assemble it in the country, a Reliance executive told Reuters previously.<br /><br />The phone's chipset, being supplied by Qualcomm and China's Spreadtrum, is likely to be its most expensive component while batteries are likely to cost $3-$4, the first source said.</p>