Money Matters - Simplified

RIL, Samsung 4G Handset Deal Hits Roadblock

Reliance Industries had been negotiating with South Korean company Samsung for buying 4G-capable devices. The negotiations have reached a deadlock as both parties have failed to agree on the price.

The deal between Indian behemoth Reliance Industries (RIL) and South Korean electronics giant Samsung regarding the development of handsets that provide voice on 4G technology has hit a stumbling block.

Sources familiar with the matter state that the moot point because is the price of the handset. The deal has fallen apart as Samsung has expressed its inability at the price demanded by RIL.

Moot Point Price
It appears that the deal will not see the light of the day as there is a yawning gap in the prices quoted by the negotiating parties.

The purchaser, Reliance Jio Infocomm, a subsidiary of the Reliance Industries, intends to purchase the handset for Rs 5,000 per unit. On the other hand, Samsung has quoted a price of Rs 8,500 per unit and that too on a minimum commitment of 3 million handsets. The South Korean company has asked for a price of Rs 11,000 per handset if Reliance does not give a minimum commitment regarding the purchase.

RIL is reportedly in talks with Chinese equipment manufacturer Huawei for the supply of similar handsets.

Ambitious Plans
The Mukesh Ambani-owned RIL has all-India airwaves that enable it provide high-speed broadband throughout the country. The company recently got a go-ahead to provide voice services on its network.

RIL has ambitious plans so for as telecom is concerned. It invested, in May 2010, close to Rs 13,000 crore to buy 20 Mhz spectrum in the 2.3 Ghz band. The company also intends to launch the 4G, or fourth generation services in the country.

"We have charted an ambitious plan for the next 12 months and we foresee making rapid progress over this period towards launching our services across India," Mukesh Ambani had said at the company’s 39th annual general meeting in June this year.

The 4G plans have been delayed due to lack of an ecosystem. RIL had planned to launch the 4G services in 2011, however the project could not take off.

Arch rival Bharti Airtel has also not launched the 4G services due to paucity of devices and absence of a ready target market.