Keypad phones fading out in India as 4G, 5G rise

Keypad phones-also called feature phones-used by millions of Indians, are staring at a bleak future.

Both segments of feature phones - 2G and 4G - have come under immense pressure in recent months due to the phased shutdown of 2G networks along with the wider availability of 4G and 5G smartphones below ₹10,000, according to analysts.

Inflationary pressures are also impacting the lower income segment-the main target audience for such basic handsets.

"Over the next two years, rural feature phone usage will decline as smartphone prices continue to drop, digital services expand, and government and telecom initiatives promote broader digital inclusion," said Menka Kumari, senior analyst, industry intelligence group (IIG) at Cybermedia Research (CMR).

She said the pervasiveness of 5G smartphones in the sub-₹10,000 price range will encourage more users to abandon feature phones. "While highly budget-conscious users still opt for 4G feature phones, their numbers are declining," Kumari pointed out.

According to a CMR report for the December quarter, the 2G feature phone category declined by 22% year-on-year, while the 4G category slumped 59%.

All feature phone vendors including iTel, Lava, HMD, Karbonn and Cellecor saw steep declines in volumes, while Reliance Jio slipped out of the top five list.

By comparison, feature phone volumes surged 52% in 2023 led by 4G models, the research agency said earlier.

This was on the back of Jio launching its JioBharat 4G keypad phone at under ₹1,000 in July 2023.

Shilpi Jain, senior analyst at Counterpoint Research, noted that feature phone shipments in India fell by 9% in 2024, and may fall further in the coming years with a growing number of consumers willing to spend more on handsets, helped by easy financing schemes.

The transition from feature phones is also backed by Reliance Jio, Bharti Airtel and Vodafone Idea's efforts to migrate the 250 million 2G users to 4G networks - or even to 5G - in a bid to boost revenue per user.

"The 2G contribution to our business now has become quite small...it is in the ballpark of 17%, and in markets like Gujarat, Maharashtra, Kerala, Mumbai, Delhi, they are in single digits, but you still see reasonably higher contribution in markets like Bihar, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, etc," Gopal Vittal, vice chairman and managing director of Airtel, told analysts during a call to discuss Q3FY24 earnings.

"My sense is that in the next few years you should start seeing substantial almost disappearing of 2G and at that stage, we can decide what we do (sunsetting 2G)," Vittal had said, adding that Airtel is currently using limited spectrum for 2G.