RCoM to make handsets, ties up with Taiwanese co

NEW DELHI: Finally, Reliance Communications (RCOM) is set to make handsets in India. After years of speculation, India’s second-largest mobile telecom operator and the largest player in the CDMA space is getting into a joint venture with Taiwan’s Cal-Comp Electronics to manufacture CDMA handsets in the country. The manufacturing plant is slated to be operational during the first half of 2008. RCOM is also learnt to have placed an order of nine million additional handsets with Cal-Comp.

“Due to the fast-growing handset market in India, Cal-Comp plans to set up a joint venture with the client to manufacture handsets in India, with the planned investment project likely to be carried out in the first half of 2008,” Cal-Comp chairman Rock Hsu said in Taiwan, without naming the client. He, however, said that his client was a CDMA operator in India which has increased the order size for 2007 to 12 million units from three million units.

With the proposed JV, Cal-Comp, which has manufacturing plants in China and Thailand, will join Nokia, Sony Ericsson, Motorola, LG and Samsung to add to the 51 million handsets likely to be made in India this year. India produced nearly 31 million mobile phones in 2006 worth about $5 billion.

Asked about plans to make handsets in India with Cal-Comp as the JV partner, the RCOM spokesperson declined to comment.

The move to place a large handset order and enter into a JV with an established player will help RCOM preempt Vodafone-Essar, which plans to launch a series of ultra low-cost bundled handsets (mobile connection and a handset) in collaboration with China’s ZTE to get a bigger pie of rural India and increase its market share. Vodafone’s low-cost handsets are expected to be priced between Rs 1,000 and Rs 1,600.

This apart, market leader Bharti has similar ambitions in the bundled handset space and is in talks with many mobile phone manufacturers for customised handsets for its new subscribers.

So it is only logical that RCOM is planning to make handsets in collaboration with a known player. The Anil Ambani-owned company has been pursuing an aggressive handset-driven expansion plan and in the last two months kicked off a series of price war in the handset category which began with the launch of the Rs 777 Classic range.

RCOM sold over a million units of the Classic range within a week of its launch. RCOM followed it up with the launch of colour handsets beginning at Rs 1,234 and sold over a half a million in the first 10 days. Subsequently, RCOM introduced FM radio mobiles at Rs 1,888 and Rs 1,919.

The price wars resulted in RCOM’s rival in CDMA Tata Teleservices launching handsets below Rs 1,000 bundled with its mobile connection and market leader Nokia choosing India for the global launch of its latest low-cost phones.
In addition to CDMA handsets, Cal-Comp also manufactures PDA handsets, chordless phones, printers, VoIP phones, GSM phones and Bluetooth headsets. Cal-Comp also operates R&D centres in Thailand, Taiwan, South Korea, China, and Singapore.

Last year, after a major tiff with RCOM over royalties on handsets, CDMA patent holder Qualcomm had said that it would share technology and provide licences to companies to manufacture CDMA handsets in India to bring down prices of mobile phone. Though Qualcomm had given the licence to HFCL to manufacture CDMA handsets in India about nine months ago, the company is yet to begin production.