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By Neel Juriasingani, CEO and Co-founder, Datacultr

How Telcos can ‘lend a hand’ towards smartphone adoption in India

Over the last couple of decades, the Indian telecom industry has become a global case study of fast-paced-mass adoption. The transition of subscribers from fixed-line telephony to 2G, 3G, and 4G has been astonishing, by several measures. The growth in smartphone adoption has been further fueled by the Government’s push to position the country as a global hub for manufacturing and successfully bringing leading brands to produce and export phones from India.

However, as the country of 1.3 billion expects to have 859 million (~84% population) smartphone users by 2022 as per a joint study by ASSOCHAM & PwC, the law of diminishing marginal utility has already kicked in. The growth in the number of new smartphone buyers has slowed down tremendously. It is because potential consumers are finding smartphones expensive and are unable to afford it.

Concerns for telcos and revenue flows 

It is not only a concern for smartphone manufacturers but also for telecom operators that invest in the tunes of billions of dollars in setting up the infrastructure. These companies make this investment upfront, and revenue flows in once subscribers start using their services.

When the pace at which new smartphone subscribers join the network slows down, the growth in data service revenue for telecom companies will slow down. In other words, they will have large chunks of unutilized internet bandwidth. To change the game, these telecom operators will have to look for ways to make smartphones more affordable, especially for people at the bottom of the pyramid.

We have already started seeing some efforts in this direction, as top telecom providers are partnering with smartphone manufacturers to provide attractive packages, subsidies, and financing schemes. While there is a more substantial business prospect for them, when new smartphone users subscribe to their services, there is always a business risk, in case the buyers do not pay their EMIs on time.

Partnership with FinTechs

Thanks to technology, telcos can now use the smartphone that they are financing as collateral. To do so, they can partner with fintech companies that provide solutions to track the device in real-time. In case the payment is not on time, telcos can send red flag alerts as notifications, block certain features on the device, or even wholly lock the device. The technology also allows telcos to send push messages in rich & interactive formats, which build financial literacy among users. Thus, they understand the importance of paying EMIs on time and maintaining a good credit score.

Given that smartphones are a critical asset and an essential source of income these days, telcos can secure their investment and cover the business risk to a large extent. The technology also builds more confidence among telcos and smartphone manufactures who are looking to innovate bundled offerings to the consumers.

As more people use smartphones, telcos will witness higher utilization of their data services. It helps them achieve break-even on their new investments and hit profitability faster. As far as the longer term is concerned, this investment by telcos will help in strengthening the momentum of smartphone adoption in India and support the Digital India movement.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of  IBS Intelligence.)

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