Hungama as GSM handset rates, sales fall

The Rs 501 Monsoon Hungama package launched by Reliance Infocomm has created a hungama in the grey cellphone markets in Mumbai and Delhi.

Sales have dropped between 50 to 80 per cent, while prices of the handsets have gone down by 2 to 10 per cent over the last couple of days.

Dealers of handsets in the grey market are complaining that since July 1, when the scheme was launched, the steady stream of customers to their shops has suddenly reduced. The grey market has already been suffering for some time with the reduction in official prices.

Says a grey market dealer in the central suburb of Mumbai, where the impact has been the maximum: "Because of the Reliance package, there is hardly any sale (of GSM handsets). If we were selling 10 pieces daily till June end, we now sell only two."

The slump is across all makes. Sales have gone down heavily even at authorised dealerships. A dealer at Heera Panna shopping centre in Haji Ali, south Mumbai, said the sales of handsets have fallen from 10 pieces to 5 pieces on an average, a reduction of 50 per cent.

"We have to push it up," he said. "We will slash prices to drive up sales," he added.

A dealer in Delhi said: "Sales have dipped in the grey market by 80 per cent and in the official market by 75 per cent at least. Prices of handsets have also

dipped."

One Mumbai dealer complained that people are also coming to sell their GSM handsets in the second-hand market as they are going in for this Reliance phone scheme.

Nokia 2100, which has an official price of around Rs 7299, and a grey market price of around Rs 5,000 is now available for as little as Rs 3,500 in the grey market.

The Nokia 6610 model, which has an official price tag of Rs 16,399 and a grey market price of Rs 12,000 is being sold for between Rs 10,000 to Rs 11,000 depending on how hard you bargain.

On an average, for the higher-end handsets which cost about Rs 18,000 to Rs 20,000, the prices have dropped by Rs 2000-Rs 5,000. In the lower end, prices have dropped by Rs 300-Rs 500.

Says Vinod Bhojwani, a south Mumbai retailer selling cellphones in the official market, "While sales in the billing (official channel) front has not been affected so much, it is the grey market people who have lost out."

The trend set by Reliance is expected to be the strategy of the future for the GSM operators as well -- of clubbing cellphones along with their services. Bharti has already tied up with Motorola and Nokia and it is offering certain handsets at 20 to 25 per cent discounts.

Bhojwani said: "This trend comes at a time when the Tatas are also launching their limited mobility services and between the two of them they are likely to capture a market share of 40 per cent."