Vodafone ties up with Itel to compete with JioPhone

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Vodafone India has bundled voice plans and cashback with 2G featurephones from China’s Itel in a first-of-itskind deal for India’s no. 2 telco. It is striving to ringfence its voice-only user base from migrating to the Reliance Jio Infocomm-backed 4G featurephone, pre-bookings for which started on Thursday.

The operator will offer talk time worth Rs 50 free for 18 months for consumers who buy one of 17 models priced between Rs 800 and Rs 1,600, being offered by the No 2 featurephone brand in the country, with a bid to protect its voice business, which still contributes around 80% of revenue, said sector analysts and industry insiders.
Under the offer, Vodafone users would need to buy an Itel feature phone, the starting price for which is Rs 800. They will then need to recharge for a cumulative amount of Rs 100 – even in smaller instalments – in one month, which will make them eligible for an extra talk time worth Rs 50 each month for the next 18 months.

Total cashback of Rs 900 would in fact make the Rs 800 phone effectively free — a counter to the JioPhone which is also effectively free, as the upfront payment of Rs 1,500 is refundable after three years.
“This collaboration (with Itel) will enable our existing and prospective customers to make the most of their new device purchase,” said Avneesh Khosla, associate director – consumer business at Vodafone India.
Itel India chief executive Sudhir Kumar said the offer was exclusive for Vodafone customers from August 25 till October 31, covering most of the festive season, after which the company may explore partnerships with other service providers.
“For Vodafone, it is a strategy to retain share in voice segment while not being squeezed between Jio and Airtel… The counter move to bundle voice with featurephones may be new, similar to strategy being adopted by players in smartphone segment through data bundling,” said Tarun Pathak, associate director at Hong Kong based Counterpoint Research.

Bharti AirtelBSE 0.24 %, Vodafone India and Idea CellularBSE -0.55 % have a majority of customers that use featurephones for voice services only in the Indian market, and proportionally, their revenue from voice is high.
They would be keen to have same or similar kind of partnerships with other handset makers in this segment, most of which are Indian players, namely, Micromax, Lava, Intex and Karbonn.
Sources said incumbent carriers are already in talks with their plans for 4G Volte featurephones with some local and Chinese handset makers. Airtel though is believed to be banking on a low-priced Rs 2,500 4G smartphone to counter the JioPhone.
A senior industry executive said the Vodafone-Itel partnership caters to users who already have low average revenue per user and therefore not asking them to pay a high amount upfront, could work in their favour and attract customers.
“The Rs 100 recharge is a cumulative amount that can be done in a month even Rs 10 at a time,” said the executive.

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