MTS launches “Free Android phone on contract” Scheme.. The new Trend?

Times of India today caught my eye – It announced “You pay just for usage, we will pay for the phone”. In the U.S, it is a norm to offer high-end mobile phones with yearly Contracts – But in India these kind of contract offerings have not yet taken root as yet. MTS is probably one of the first Telecom carriers who have bundled a Free high end smartphone along with an yearly contract.

Essentially, MTS has tied up with HTC to bring MTS Pulse Android phoneto market . The subscriber, who avail this offer, will have to sign a yearly contract with MTS and subscribe to minimum plan of Rs. 1500/- per month. Meaning, even if you don’t make a single phone call, your bill will come to minimum Rs. 1500.

To me, this is a win-win situation for MTS – Let us do some simple calculations – At Rs. 1500/- per month MTS ends up getting about Rs. 18k in a year. The real cost of this phone is probably close to about Rs. 10k (and MTS may have got it much cheaper). So, come what may MTS stands to make 8 to 10 k in a year from a new subscriber. Additionally, for MTS, they have gained a new post-paid subscriber who probably will stay with them for more than a year.
Although the details are not given, I am sure the phone offered by MTS is a locked phone and can be used only with MTS simcard.
From Subscribers point of view, although it works out expensive, they have luxury to pay the whole sum over 12 months in smaller instalments, instead of paying for handset upfront.

MTS Offering details

• Activation Charge – Nil
• Monthly Rent Commitment – Rs 1500 for 12 months
• Free Value/month – 1500 mins(Local + National), 1500 SMS(Local + National) & 1500 MB data usage
• Call Rate After Free Value – Local@ 1p/2sec, STD@ 1p/sec & data charges @ Rs. 2/MB
• Standard ISD & Roaming rates will be applicable
• MTS is also offering quite a freebies on this phone

If you want to avail this offer, subscriber will have to furnish following details:
Document required to avail the offer-

• Salary slips (last 2 months) or IT returns (last 2 years)
• One Photograph
• PAN card copy
• Address Proof
• 6 post dated cheques (Amount will be notified at our branded retail store)

It would be interesting to see if other telecom carriers also come up with similar schemes. There is also question that needs answer – what happens if the subscriber refuses to pay half-way through the year?. The legal processes in India are not as black & white as they are in the U.S and company may actually end up suffering.