Reliance rattles Indian telcos again by unveiling ‘free’ 4G phone

MUMBAI: India's disruptive new mobile entrant Reliance Jio, backed by the country's richest man Mukesh Ambani, unveiled a low-cost 4G-enabled phone on Friday to woo tens of millions of new customers, further destabilising established telecoms players. Jio has enjoyed a meteoric rise since its launch a year ago, with its months of free services and sharply discounted plans battering the fortunes of incumbents such as Bharti Airtel and Idea Cellular, who have seen revenues and profits shrink dramatically.

Despite Jio's rapid rise, funded by mega-profits churned out by parent Reliance Industries' core refining and petrochemicals operations, it has been unable to tap more than 500 million nonsmartphone users in India, who still rely on old feature phones to make calls and send text messages, as its network only supports 4G-enabled phones. Reliance sees the new handset, named JioPhone, allowing it to target India's entire mobile market for the first time.

The new phone will "effectively cost zero" as buyers would be able to get the device for a one-time refundable security deposit of 1,500 rupees ($23.3), said Ambani, chairman of Reliance Industries, announcing the launch at the conglomerate's annual shareholders' meeting. The announcement, which was greeted by applause from shareholders at a packed auditorium in south Mumbai, sent shares in rivals Airtel and Idea down 2 percent and 3.3 percent, respectively