Why telcos are ringing in mobile handsets

It may seem like a natural progression, but it has taken more than a decade-and-a-half for telecom operators to look at the mobile phone business in India. This is because, earlier, the market was completely skewed towards global manufacturers like Nokia, Sony Ericsson and Samsung. But the recent entry and growth of national mobile brands like Micromax, Maxx, Lava, Rage and GVL has helped many understand that the Nokias of this world can be beaten in a price-sensitive market like India.

So, the first step from being a cell service operator to a mobile phone player was taken by none other than the telecom giant Bharti Airtel when it announced the launch of its own range of low-priced phones. This was launched under their subsidiary phone brand company Beetel.

The price range of these mobile phones is between Rs 1,750 and Rs 7,000. After Bharti, others have followed the cue. Tata Indicom recently announced a QWERTY phone, which is a co-branded product with Alcatel. The mobile phone is bundled with Yahoo services.

This is clearly pointing towards a trend of telecom operators looking towards the mobile phone market for revenue growth. India does about 130- odd million in new mobile phone sales each year and, with large subscribers now coming from the semi-urban to rural areas, low-cost handsets seem to be the order of the day. Local players like Micromax seemed to have cracked this aspect with their competitive price (ranging between Rs 2,000 and Rs 8,000) and an excellent bundle of features that includes social networking, among other things.

Opportunity for telecom operators
As telecom penetration goes rural, telecom service giants like Bharti Airtel have the unique advantage of a retail reach that mobile phone manufacturers are unlikely to have. The other advantage they have is the option to bundle cheap call rates and plans along with a mobile phone sale. They can also partner with content providers for value-added services (VAS) products and bundle the same, targeting apps for rural India.

This is also their way to offset the impending losses that they may foresee due to the increase tariff-based competition in the mobile services business and also the ever-falling per-second rates.

All in all, it’s a natural progression for a telecom player to look at the Indian mobile phones business as the market has already been expanded by existing Indian players via their cheap pricing and feature rich phones.

Rajiv Dingra is the founder and CEO of WATConsult, a social media agency. He also founded www.WATBlog.com, a leading digital media blog