“Apple Inc., ranked a distant eighth in India’s smartphone market, may fail to narrow the gap with leader Samsung Electronics Co. (005930) as a lack of subsidy from local carriers renders its cheapest new model unaffordable,” Kartikay Mehrotra reports for Bloomberg.
“The iPhone 5c, yet to be released in India, may start at $549, more than five times the $99 buyers opting for a plan in the U.S. pay,” Mehrotra reports. “Unlike the largest carriers in the U.S. including Verizon Communications Inc. and AT&T Inc., or China Telecom Corp. and China Unicom Ltd., Indian wireless providers don’t offer service contracts subsidizing the iPhone, leaving the handset overpriced for most Indians.”
“While smartphones including the iPhone help generate average revenue per user of $68.49 a month for U.S. carriers, India’s wireless operators, boasting the cheapest call rates in the world, have an ARPU of about $1.60, making subsidies not viable, according to Rajan Mathews,” Mehrotra reports. “Indian carriers have tried the subsidy model without much success, according to Mathews. When Reliance Communications Ltd., India’s third-largest listed mobile carrier, started its wireless service a decade ago, the company offered LG Electronics Inc. and Samsung handsets along with an introductory three-year contract for 21,000 rupees. Within months, users had stopped making their monthly payments and the company took a big financial hit, said Mathews. ‘People took the phones and disappeared,’ he said. ‘It’s impossible to enforce these contracts in India. There’s no way to recoup the cost of the phone.'”
Read more in the full article here.
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