Mukesh Ambani's Reliance IndustriesBSE 1.03 % (RIL) is said to have finalized Samsung as a partner to source the Korean conglomerate's long-term evolution (LTE) technology platform for its much-talked about bundled data & voice services over high speed 4G networks across the country.
Samsung has agreed to offer entry-level 4G smartphones at a little over $100 (about Rs 5,500) for use with RIL's voice and high-speed internet services, said a source close to the deal.
The game-changer deal that is set to shake up the Indian telecommunications market is not just restricted to Samsung's technology but goes far beyond as Samsung has agreed to offer entry-level 4G smartphones at a little over $100 (about Rs 5,500) for use with RIL's voice and high-speed internet services, said a source close to the deal. A 3G-enabled Samsung phone can be bought for around the same price today. The entry-level smartphones are likely to be sold with data packages starting at as low as Rs 100, said the source, adding that even high-end smartphones will be made available at minimum down-payments and the equated monthly installments (EMIs) will be incorporated in subsequent bills at a 0% interest rate.
RILBSE 1.03 % is planning a soft launch in Mumbai and Delhi by mid-2013 and a formal launch is set to be announced later this year, most likely on December 28, the birth anniversary of Reliance founder, late Dhirubhai Ambani.
Both RIL & Samsung declined to comment on the deal.
However, sources in the know told TOI: "Samsung will not be just another vendor to RIL supplying handsets as it was when Reliance Infocomm was launched in 2002. They are seeking a much broader role. A possible joint venture could also be in the offering." Reliance itself is not averse to the joint venture model these days, unlike in the past.
For Samsung, the JV with RIL will not only pave the way to capture the third biggest mobile market in the world but also allow it to use the India launch to showcase it in the US market as well where it wants to give Apple a tough fight, said sources. Samsung has already scored in the Indian market by taking the first-mover advantage by bagging the RIL deal over its rivals Huawei and Alcatel-Lucent, among others.
RIL, which is known for pushing vendors to the wall when it comes to squeezing out margins, apparently hasn't been able to replicate it with Samsung this time as it did a decade ago. The reason: Samsung, which entered the mobile phone business in 1997, is now three times bigger than RIL in terms of sales and four times larger in terms of net profits and is seen to be giving a tough fight to Apple in many markets with its smartphones and tablets.
"We went to the Korean giants before the Reliance Infocomm launch to manufacture handsets at $100, a price never heard of then in early 2000. They didn't entertain us then. We came back to our drawing boards, did an in-house research and went back to them showing how handsets can be manufactured within $100 and told them if they don't manufacture handsets for us at that price, we will do it on our own. In the process, they will miss out on a billion-dollar opportunity. That's when they gave in," admitted a Reliance insider on how companies like LG and Samsung had fallen in line to manufacture handsets for RIL during the Infocomm launch 2002.