RIL may need to spend 25% more on subsidy of JioPhone Next

Kolkata: Reliance Industries Limited (RIL) may need to spend about Rs 3,750 crore or 25% more on subsidies than that estimated earlier if it plans to price its upcoming budget 4G smartphone, JioPhone Next, at about Rs 4,000, said analysts, pointing to the global shortage and consequently higher prices of semiconductors and other components.

“We reckon if RIL prices the JioPhone Next smartphone at around Rs 4,000 and looks to sell 75 million units, the subsidy element per handset could rise to around Rs 2,500, or Rs 18,750 crore overall,” an analyst at a leading brokerage told ET on condition of anonymity. “This is due to a near 20% rise in component prices, particularly memory and LTE (4G) chipset costs, coupled with procurement delays and the continuing global shortage of semiconductors.”