India's RCom Starts Subsidizing iPhones

Signing up for a monthly wireless contract to get a subsidized iPhone is common in the U.S., but in India, Apple fans are accustomed to paying the phone’s full price. In November, Reliance Communications (RCom), India’s third-largest mobile operator by market value, became the first to hand iPhone 5Cs to customers willing to commit to 2,599 rupees ($41) a month for 24 months. Gunjan Hasan, who got one at an RCom shop in Mumbai, says she’d been putting off buying a phone because of the upfront costs. “When you have a family and other expenses, you really need to think before paying up to 50,000 rupees [about $800] or so for just a phone,” says Hasan, 36, who works at KSA Development Venture, a teacher-development company in New Delhi.

The subsidies are part of Chief Executive Officer Gurdeep Singh’s plan to reduce RCom’s dependence on low-margin users. India is the second-largest mobile market after China. In the fiscal year that ended in March, its active subscribers hit 788 million, up 37 percent in two years, according to the Cellular Operators Association of India. Most of those users, however, have cheap voice-only plans; India market leader Bharti Airtel averages $3.10 per subscriber each month, compared with $8.80 at comparably sized China Telecom. Subsidies may nudge shoppers toward pricier data plans, Singh says: “We are hungry for growth, and this could be the tipping point.”