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Is The Reliance Apple iPhone 5S Offer Worth It? – Capital Mind

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capitalmindRCOM has a great offer for the Apple iPhone 5 (C and S), where you pay very little down, pay every month instead for 24 months, and then get all voice, SMS and data for free, unlimited. But how good is the offer?

Also See: Unbundling the iPhone 5S Deal For a Cheap Unlimited 2 Year Plan



First, if you’re one of those mad Apple fans that will only use Apple products no matter what the rational argument against them, just because they’re Apple, then you should stop reading here because you couldn’t care less what the economics is.

Now, let’s see the offer. From the press release:


This means you pay Rs. 2,600 per month for an iPhone 5C, and Rs. 3,000 per month for an iPhone 5S.

And then, from @Harry_Jerry:

EMI details for the Reliance iPhone 5s bundle -


The Deal

As a bundled deal, the transaction gives you a phone and two years of services free, as long as you pay a fixed amount every month. You get unlimited data, unlimited (India) calls, and unlimited SMS (limited to 3K texts per month).

What you do is:

  • swipe your credit card – only Citi, Stanchart and ICICI (and now, HDFC, it seems).
  • The amount charged is Rs. 61,856 (for the iPhone 5S, 16 GB).
  • You then pay your credit card back every month: a sum of Rs. 2,999 will be added to your outstanding amounts

Credit Card Limits, EMI and Interest

For the example above, You need an available limit of Rs. 62,000 or more to avail this facility – the entire amount gets swiped and converted to an EMI. This is like a retail transaction to EMI scheme that many banks have.


That also means Rs. 62,000 is blocked from the credit card limit immediately. If you have a Rs. 75,000 limit, you will only get to use Rs. 13,000 on further purchases.

Every month, your EMI will pay principal and interest. The principal paid will free up your limit every month:


You are paying 15% interest for this loan, which is competitive.

What isn’t apparent is “service tax”. You will need to pay 12.36% service tax on the interest component. This adds up to another Rs. 1,000 over the term of the loan. (See SBI Terms)

Minimum Amount Due and Reward Points

Every month your credit card comes with a “Total Amount Due”, a “Minimum Amount Due” (which means you roll over the rest). Assume things are the same for the card balance (beyond what’s blocked for the iPhone purchase), and your minimum amount due will be whatever it used to be earlier, plus the EMI amount.

If for any reason you can’t pay the “minimum amount due” you will then have penalty charges and interest (usually very hefty, more than 3% a month).

You might not get reward points on this transaction. ICICI bank’s terms say:

  • The card member has understood that by availing the facility, the card member shall not be, unless otherwise stated by ICICI Bank in writing, eligible for any reward points whatsoever, whether awarded under the ICICI Bank Reward Points Scheme or any other reward points scheme on the card that may be announced by ICICI Bank from time to time.

Can You Run Away With The Phone and Not Pay?

Of course you can. But that’s like saying “Can you steal my car?”

Your loan is from a bank (that issues the credit card), not from Reliance. So if you default, the bank will come after you for the loan. They will add you as a defaulter to CIBIL.

They don’t care about whether you have decided to become an Android fan, and they will not cancel the loan if you give back the phone. You have to pay the full amount, and they can get a hold of you even  10 years later. Your credit card will be blocked – because you’re not defaulting just on this, it’s a default on your card dues.

My advice: Just Don’t Do It.

If the person giving the loan was Reliance – and it used to be the one taking the risk in 2000 when it introduced phones for Rs. 500 apiece – the risk would be of Reliance and they have shown they aren’t very good at catching people who stiff them. But a bank is a different proposition.

Why is Reliance doing this?

Reliance gets Rs. 61,856 upfront. In that, it has to provide a phone which it probably gets at way cheaper than market. The retail price is Rs. 53,500 so we can guess it gets the phone for about Rs. 40,000.

Effectively, RCOM will get about Rs. 22,000 as a margin on this product, and this should cover what it costs to provide the free services for 24 months. This comes to about Rs. 1000 per month as a discounted return. Providing an “unlimited” service with a definite customer for 24 months isn’t a bad deal (even if you walk away, they still make that much money since its paid upfront).

Which also means: if their service sucks big time, you can’t do a darn thing, because you have already given them your money for 24 months.

Additionally, as a “source” of the loan, the bank might pay them about 2% , which is another Rs, 1,000 they earn.

Any other pitfalls?

Network woes: If you buy this phone and you’re not already a Reliance subscriber, you might have to change numbers (or port your number, which could be painful). The Reliance 3G network isn’t available everywhere (it’s not in Bangalore, for instance) so you might find that a pain.

Upgrades: There will be an iPhone 6, and then 7 or whatever. The bank doesn’t care. You don’t get the upgrade, unless you pay for it separately. This is what makes this deal very different from the operator deals.

The above chart shows you that you have about Rs. 33,000 left to pay after a year. That means a year later, if you want to upgrade to an iPhone 6, you will still have to pay Rs. 33,000 and then buy the other iPhone. You might be able to sell this phone and enter into a fresh contract for the new one, but that will require RCOM to unlock your phone (who’ll buy it if it’s locked to your number), which is a pain.

No LTE (yet): Want an even faster connection? RCOM’s offer comes with 3G, but what when they roll out the 4G LTE? You don’t get the faster speeds for free, most likely.

What are the alternatives?

You can buy this phone at a lower cost, in the market. The iPhone 5S (16 GB) sells for Rs. 53,500.

Perhaps you won’t get all the freebies, but think about your usage. I use a prepaid Airtel connection and I don’t pay more than Rs. 1,000 per month for voice plus incredible amounts of data. You also get the advantage of being able to use it on different networks and without changing your phone number.

However, even if this amount is converted to an EMI for 24 months at 12% per annum (the lowest that you will get), you still pay Rs. 2,500 a month for the EMI, plus now you have to pay for usage, which is likely to be higher than Rs. 500 per month. So it might not really be worth it.

You can use their “discounted option” of paying the full amount minus Rs. 6,000. For an iPhone 5S, you pay Rs. 66,000 upfront for the same deal. This makes little economic sense, as the EMI option is an effective 10% more, for two years, which is better (even if you have the money).

And then, of course, you could use an alternative phone itself. I have a 5 inch Android Micromax Canvas HD 2 bought for 14K in April with 32 GB extended memory, and I use it as a phone, a camera, an alarm clock, a trading terminal, a twitter client, facebook, email, tv-remote (!), and a music player. Sure, you might miss the fingerprint recognition or iTunes, but I couldn’t care less.

I know some of you think little of brands like Micromax; I don’t go by brand value. I’m always rooting for the underdog.

Where Do We Stand?

Compared to a Samsung Note 3 (Rs. 47,000) or a Nexus 4 (Rs. 25,000) this phone might seem expensive. But if you

  • really want to buy the iPhone 5(S or C), and
  • don’t mind switching to the Reliance network, and
  • don’t care about upgrading your phone for two more years, and
  • don’t want 4G LTE for free when it comes, and
  • don’t have a problem with the limit getting blocked on your card, and
  • can afford this EMI (A must. Revolving credit costs on credit cards are ludicrously high)

You should take this offer. If any of the above are a potential no, you have to figure out if it is a calculated risk or a potential waste of money.

(Or, if you’re a mad Apple fan, ignore everything above and just buy it)

Also See: Unbundling the iPhone 5S Deal For a Cheap Unlimited 2 Year Plan

The original post was published here.

This post was written by Deepak Shenoy. Deepak writes on Money, Markets and Economics at Capital Mind.  He works with financial big data analysis in an early stage company and lives in Bangalore. 

(c) Capital Mind 2013. 

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  • naveen

    hi.nice article. to the point.

  • Nishit

    I am an avid android user but this article has so many instances that doesn’t make sense at all. For ex, get your source cleared.. the phone is coming unlocked from reliance. You can sell it immediately after purchase!
    2. Penalty charges are heavy on credit cards for late payments. Gee, thanks. That makes the offer bad and Reliance is totally at fault.
    3. Lets say if you are a heavy phone user. Your phone bill is deemed to be close to 1500 p.m. That makes the phone at just 36k. Not bad, eh? How do you care at what price Reliance gets it for? At the end, the benefit is passed to the consumer.
    4. Are you seriosly comparing your micromax to an iPhone 5s? It reeks of a paid article or sheer unaffordability transpired to settling with a budget phone and laughing at people who can afford one. Its like the story on Indian roads, any accident between a car and bike is deemed to be the car’s fault cuz they are richer.

    I dont use an apple. And not planning to shift from my android love anytime soon. But still dumbstruck by the article which somehow seemed trying too hard to show downsides in an obscured meaningless fashion. Thanks for nothing.

    • Let me address. Yes, the phone comes unlocked – had noted it in another article (http://capitalmind.in/2013/11/unbundling-the-iphone-5s-deal-for-a-cheap-unlimited-2-year-plan/)

      The reason I mentioned penalties was that too many people were asking about whether they could take the offer and scoot. I had to clarify that this is a credit card EMI deal – and if you’re unhappy with the Reliance network at some point, there’s no point not paying the EMI (which one might be tempted to do if it were a direct Reliance contract)

      Of course, if you use Rs. 1,500 worth, the phoen is “free”, but in a changing world, putting the cost over two years is a little much. 4G might come (3G prices will crash then, so your Rs. 1500 bill today is Rs. 800 tomorrow for 3G). iPhone 6 and 7 will (if you upgrade, the cost goes up to a lot more suddenly) and so on.

      This is not a paid thingy. I don’t do that kinda stuff; I’m an actual Micromax Canvas 2 HD user who’s used an iPhone. I’ve used smartphones since2003 when they weren’t even called that, and I’ve probably spent more on phones than an iPhone user would have. I just don’t find the iPhone (or the Samsung G4 or the Note, to be honest) as much bang for the buck anymore. Please don’t get sanctimonious about money to me, or tell me I can’t “afford” iPhones, just because you think Micromax is a “budget” and therefore has-to-be-bad brand.

      But hey thanks for your feedback!

      • Nishit

        God made the world in such a manner that nothing is ever future proofed. Well humans made technology which is even worse. God’s evolution takes centuries and human’s technology advancement takes months. Discounting factors of future tech into the equation never helps anyone. It all depends on right “now”. I use an s3. It was launched at 42k and top of the line tech but I waited for a good 10 months when the price was almost half to buy as refurbished ones from Samsung Cafe. Guess what , S3 was old news by then. What iPhone 6/7 holds in future is simply irrelevant. Look at TVs. CRT →Flat Panel→Projection→Plasma→LCD→LED→HD→FHD→UHD→OLED. All in a span of 10 years. If I get a UHD now which costs 3 lakhs and above, can I be assured it is future proofed. The answer is NO but only the time factor is non predictable and inconsistent.

        Was using micromax before I had shifted to samsung. There are critical issues to be understood why micromax has such low prices. First, their after sales service is kept at minimum. Second, they give the highest configuration possible with lowest prices. This gives a copious amounts of health hazards. Just compare the radiation levels of apple phones/samsung top end phones with micromax. My micromax used to heat up on prolonged calls. Dangerous! Even my ears used to get warm. Don’t put your health at risk to save dough when you can afford one.

        Coming to the point, 4G coverage in its full potential can be expected to take at least an year. Remember the 3G launch prices and the time it took to bring competitive prices? Add 4 months to that at the minimum. In a nut shell you may lose on the benefits of 4G for last 6 months of the contract.
        Don’t expect the 4G prices to come down soon. Why? See the number of phones supporting 4G. Prices come down with higher penetration into the market. Very limited varities of 4G compatible phones makes it a hard sell. Majority of consumers will be dongle users. So the bill reducing from 1500 to 800 on launch of 4G is just ridiculous. What was the calculation behind this? Unlimited calls, free roaming, unlimited 3G etc etc at 800 for future prices? Where is the inflation factor?

        I agree that you will be stuck to reliance for two years. So the decision to switch should be thoroughly anaysed. Over here we have only 3 players in 3G including BSNL making Reliance a preferred choice with a higher coverage over Aircel.

        Apple has an advantage. One can sell it second hand at better prices than its counter parts. Will u please buy my second hand S3? :-D

        • Bhaskar Sharma

          after reading such long blogs.. only question I have is:
          Why Akbar is also known as Jille ilahi??

          A. he use a miceomax canvas 2
          B. Reliance is cheater company
          C. 3G & 4G are the root cause for the fight between u two
          D. I don’t have 60K balance in my credit card?

        • mridul goyal

          reliance is thief………

      • Neel Gupta

        If you can afford an iPhone, then you can definitely afford a Nexus !
        Buy a Nexus 5, and then give us a proper comparison.

    • guest

      Whatever but 60k mobile is not worth it even if its apple. And btw the actual bom of iPhone would be around 10k so its in micromax range. What you pay more is having a status symbol.

      But iPhone is too over priced in India.

  • Ekalavya

    I think another problem here will be that… 3G prices might drop elsewhere over the next year or so and Rs 3000 pm might be more than what you’ll ever end up paying for Calls + Mobile Internet. SMS – lol. I’m sure you’re not the SMS type if you are using an iPhone 5S. Additionally I’m sure 4G will become popular in 48 months. So while all your friends will be on 4G, you’ll still be on 3G.

  • Ashish

    Hahaha. Sticking to my iPhone 4 with micromax canvas 2 :p

    Your post really helped me else I would have bought it tomorrow without thinking so deeply.

    Nice, keep it up. Thank you

  • Ssameer

    My Phone bills come up to 3500 a month.. I feel this is a cheaper option. The only Hitch i have is the network connection. I can also have my calls diverted to my other number
    i am just a bit confused. Can anyone pls suggest about the Reliance connectivity

    • Nishit

      Really depends where you are based. But if you are a user on the go, ie, lot of roaming, stay away from reliance and head for airtel or bsnl. As far as I know, Reliance network is very manageable in Odisha and West Bengal

  • ishaq idrisi

    thz buddy u saved my day…… today

  • gauravjeet

    nice proposition, u saved my money.. thanks

  • bhaskar

    thanks alot for clarifying all doubts

  • shubham

    nagpur me kab launch hoga ye….plz sir jaldi launch karo

  • Mohit

    Sir, i have airtel connection can i use the same number with reliance , as i am planning to purchase 5C Iphone with 2599 per month and let me know which bill i receive that has call details and how much tax will be there.

  • Rahul Verma

    Reliance is cheater I have deposited 2000 Rs for to book 5s a month ago even on repeated request they are not returning amount neither giving phone though promised to return amount if fails to give iphone5 as ordered in a week

  • Puneet

  • Rahul Gupta

    Any idea of delivery dates of Iphone 5s? I made online order on 10th Dec. I dont see any communication related to the shipping of the phone till 15th Dec. Customer care line says it ll come in 5 to 7 days. But even after 5 days no shipping communication from their side.

  • Himanshu

    Very Nicely explained that how these such offers always cheat customers, thanks
    One more point to add, you must have a credit card whose validity is not expiring in coming 24 months.
    It would be a valid offer, if customer was free that how he is gonna pay his installments and no credit card is required, but this would be greater risk for any telecom company to give such an offer.
    Reliance has already been in a mess while it provided mobiles in Rs. 500

  • neo_R

    the cost of an iphone 5s is about 4-6 days salary for an middle class american and 4-5 months salary of an middle class indian.Only People who like showing off like to buy this phone (android is much better)

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  • Budh

    A very simple calculation – an iphone 5s box packed sold second hand can fetch you 40k .. That still gives you 22k worth of free talk time for 2 years which is less than 1k a month .. Even if you are a sceptic of Reliance, Apple and credit card companies .. I don’t think you should rubbish the scheme .. If you have alternatives to all the 3 buy a nokia and pay in cash.. The most ridiculous part if this article is that the scheme does not facilitate people who dont want to pay back the emi .. Ya clearly the target segment of Apple.. My advice stick to cash , prepaid phones and bsnl land lines and let people move on ..