Sunil Mittal-led Bharti Airtel on Wednesday said it was partnering handset maker Karbonn Mobiles for marketing a cheap 4G-enabled smartphone to counter the cut-throat competition unleashed by Mukesh Ambani-run Reliance Jio's launch of a low-priced feature phone that has pushed established telcos against the wall. Airtel said the effective price of the bundled 4G smartphone would work out to Rs 1,399 which is 60 per cent lower than the market price of the phone.

While Reliance Jio had unveiled an Internet-enabled feature phone for a refundable deposit of Rs 1,500 in July this year, Airtel said its partnership brings an affordable 4G smartphone to the market effectively at the price of a feature phone. Bharti Airtel said this would be the first of many partnerships with mobile handset makers to bring affordable 4G-enabled smartphones into the market.

The customer needs to make a down-payment of Rs 2,899 for the 4G phone and make 36 continuous monthly recharges of Rs 169. The customer will get a cash refund of Rs 500 after 18 months and another Rs 1,000 after three years, taking the total cash benefit to Rs 1,500, the Airtel statement said to explain how the company arrived at the Rs 1,399 effective price figure. The Android-based 4G smartphone, Karbonn A40 Indian, has dual SIM slots and access to popular apps like YouTube, WhatsApp and Facebook.

The offer comes bundled with a monthly recharge pack, cashback and data and calling benefits, it added. Consumers can go in for recharge of any denomination and validity as per individual requirements in case they do not want to go for Rs 169 bundled plan under offer. But the cash refund benefit is contingent on consumer going in for recharges worth Rs 3,000 within the first 18 months (to claim the first refund instalment of Rs 500) and additional Rs 3,000 over the next 18 months (for second refund instalment of Rs 1000), it added.

The consumer will not need to return the handset to Airtel or Karbonn at any point to claim the cash benefit. The offer forms part of the Airtel's strategy to fight Jio's disruptive pricing that has sharply eroded profits of incumbent telecom companies. The Reliance Group has deep pockets as it is using profits from its lucrative oil refining and petrochemicals businesses to cushion the huge discounts being offered to its telecom customers. Trai's decision last month to slash call connect charges has also come as major setback for established telecom players who claim they will take a hit of Rs 5,000 crore during the current fiscal year.

The cut in call connect charges will benefit Reliance Jio as it has a huge number of calls made to rival networks while it receives much fewer calls from them on its own network. COAI, which represents leading telcos Airtel, Vodafone and Idea, said that the Trai decision had come at a time when the debtridden industry was under financial stress because of the high cost of spectrum. Telcos have contended that Trai's assumption that all operators should move towards the latest VoLTE technology is not practical.