Here's how much subsidy Freedom 251 would need to fulfill 6 crore phone orders

PRAVEENA SHARMA | Tue, 23 Feb 2016-09:10am , New Delhi , dna

Even if we were to put aside all other doubts about Freedom 251, priced at Rs 251 by Ringing Bells, Pankaj Mohindroo, president of Indian Cellular Association (ICA), says it would be impossible for it to fund the subsidisation of the smartphone.

The recently launched Freedom 251 has taken the Indian market by storm with its unbelievable, and as many claim commercially unviable, pricing.

Mohindroo, who has asked the telecom ministry to look into the venture's tall claims, told dna it was a "serious matter" and that just the cost of subsidising the seven crore orders received in three days by the company would be more than daunting.

Even G Krishna Kumar, a Bangalore-based telecom analyst, said Ringing Bells would have to rely heavily on cross-subsidisation model to meet its promise on pricing, with the "bill of material" for a decent quality mobile phone in India currently being upwards of Rs 2,000 per unit.

"The bill of material of a decent quality phone will be upwards of Rs 2,000, that is the bare minimum cost to make a phone. There will also be overheads irrespective of the channel used for selling the phones (e-commerce or brick and mortar shops). So, if they are selling it at Rs 251, someone is subsidising the phone," he said.

After the overwhelming response that the company received for its product, it has stopped taking any more bookings.

dna was unable to reach the company officials on Monday, but according to reports in the media one of the promoters of Ringing Bells Mohit Goel assured all orders would be met on time.

Krishna Kumar observed that the orders that the handset company had received was more than 50% of the current smartphone market. According to the market research and analysis firm International Data Corporation (IDC), India's smartphone market was 103 million in 2015. The three-day order of Ringing Bells of around 70 million comes to about 70% of this.

"Rs 251-phone, if indeed can be realised with acceptable quality, can hugely disrupt the Indian smartphone market. India is among the fastest growing market for smartphones with about 2.5 crore smartphones sold every quarter in the country. That's about 100 million phones in a year," he said.

However, he said India had moved beyond the "cheapest only sells" market. "Just 10 years back before the Indian mobile phone makers entered the market, ultra-cheap Chinese phones were popular, but then they soon lost the market due to poor quality," said the telecom expert.