India’s telecom giant Reliance is working with Google on a $25 billion plan to develop affordable 5G smartphones and services, the company said on Monday.
Reliance Chairman Mukesh Ambani said during the company’s annual general meeting that Jio’s 5G network, which will be launched starting with New Delhi and Mumbai before being expanded across the rest of the country by next year December, will be the world’s largest.
The plan, which is the latest in the company’s efforts to disrupt India’s telecom market, is expected to be executed in two months. It has a promise of crashing the cost 5G devices in India, making it “ultra-affordable”.
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“To take the 5G mass market, a sub-$100 phone is imperative and Jio is rightly positioned to bring 5G to the masses,” Reuters quoted Neil Shah, vice president of research at Counterpoint, as saying.
Reliance Jio, which owns the largest share of India’s telecom market with more than 420 million subscribers, beat competitors to clinch airwaves worth $11 billion in a $19 billion 5G spectrum auction earlier this month.
Jio has deployed ‘price-crashing’ as a playbook to win market shares since 2016, when it launched cheap 4G data plans and free voice services. The playbook was also used by the company when it partnered with Google to introduce an $81 4G smartphone.
India has the second largest telecom market in the world, but about 700 million people still don’t own smartphones due to cost. Thus, the key to putting more smartphones in people’s hands lies largely in making it affordable.
Nigeria’s similar situation
In Africa where Nigeria has the largest telecom market, the cost of 5G devices poses a threat to successful rollout of the fifth-generation services.
In an interview with Punch last month, Vice President, Global Telecommunications Industry, IBM, Craig Wilson, pointed at the affordability of 5G devices as the biggest threat to successful rollout of 5G services in Africa.
He said that although some device manufacturers have committed to bringing costs down to around $150, the cost of a 5G device currently runs around $350, making them unaffordable for many.
“Still, many industry analysts believe that 5G devices need to be at about $50 to support mass adoption across Africa. The high cost of 5G phones is a major impediment, and it impacts the launch the fifth generation network on a commercial scale when there are not enough mobile devices capable of receiving it,” he said.
MTN Nigeria, the leading telecom company in the country that has just kicked off its 5G rollout, is caught in the challenge of unaffordable 5G devices.
MTN and Mafab won the 3.5 gigahertz (GHz) spectrum auction for the deployment of Fifth Generation technology in December 2021.
Nigeria has a population of more than 200 million people with only about 40 million estimated to own smartphones. To fill this huge gap through 5G rollout requires availability of affordable 5G devices.
With the success of the rollout in Nigeria depending much on making low-cost 5G smartphones available, MTN may need to copy Jio’s “ultra-affordable” plan.