Telco closely working with finance firms to spur smartphone adoption: Airtel's Pratik Joshi

Bharti Airtel is closely working with financing companies to spur feature phone to smartphone conversion, Pratik Joshi, head of device ecosystem at India’s second largest telco said.
"From a base of 350 million feature phone users, organically only about 40 million people move to smartphones every year. By that rate, it will take 7-8 years for everyone to move to a smartphone," Joshi said, speaking at a panel discussion at the India Mobile Congress 2022.

With the price delta between a feature phone and an entry-level smartphone moving up quite sharply as a result of the high-end features trickling down to the entry-segment, Joshi sees a lack of organic conversion a hurdle in the telco's plans to monetize its 5G services that it launched across eight cities in India on Saturday.

The 350 million feature phone users, Joshi said, are broadly from rural areas who don't have a credit profile and are underserved by device financing companies like Bajaj Finance.

"One initiative is to closely work with these device lending companies to enable loans to people who want to move to smartphones

"One element we bring as a telco is the visibility we have of feature phone customers. Here we can work closely with the lenders to target the right audience and extend an affordability loan to them," Joshi said.

He added that Airtel will also work closely with smartphone OEMs on how to improve the proposition of devices, and bring down the upfront cost of the device through cashbacks, offers, etc.

Airtel is already working with Realme to offer a Rs 750 upfront discount on an entry-level model to make it more appealing to feature phone customers.

While affordable smartphones are needed to help feature phone users upgrade, the market itself is moving to more premium segments.

Joshi said that the sub-Rs 10,000 segment used to contribute to 50% shipments in 2019, which has now come down to below 20% this year.

At the same panel discussion, Sachin Kalantri, senior director at Qualcomm said since the onset of 5G services, people are demanding more memory, storage, longer usability through the day, and a better display, which is pushing up prices of 5G devices.

However, the price going up is only a short term factor. As the scale matures, price will start stabilising and affordability will start happening.

"Even today, you can come up with a Rs 7000 5G smartphone, but the feature specifications won't be adequate for the type of services that 5G will enable," Kalantri said.

A senior Airtel executive said Airtel will have 5G services across the top tier cities by March 2023, and across India by March 2024. However, 5G devices penetration remains low at 9-10%, which poses a hurdle in achieving high return on capital.