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


Extending my post on the Indian iPhone 5S deal (Is the Reliance Apple iPhone 5S Deal Worth it?) there seems to be an interesting idea. Thanks to the good folks on twitter for all their input.

The Phone and the Voice/Data Deal Are Separate

According to the FAQ:

4. Is the handset locked to Reliance services or can I use any other SIM?

The iPhone purchased through Reliance is not locked to Reliance. You can use the iPhone for any SIM of your choice. However, since this is a bundled offer, it is in your interest to use Reliance.

11. Will this plan work, if I change my handset anytime within 24 months?

All benefits of the offer will work even if you change your handsets in the next 24 months. However pls note this plan will not work in dongles and will only work in smartphones.


  • The phone isn’t locked. You can use it on any other network.
  • The SIM card you get can be used on any other phone.

So you can unbundle the two and value them separately.

“Stripping” the deal

In financial bonds, you have a security that contains a) interest rate payments every year and b) a balloon principal repayment at the end. Now there are people who want to buy the cash flows only (like annuity buyers, retirees who want to pay now for a long term contract to get annual income). Others might not care about annual payments, but want only the principal to appreciate (no reinvesment risk).

You would “STRIP” the bonds – the interest coupons which would earlier come stapled to the security  would be sold separately, and the security itself would be sold separately. This is effectively unbundling the deal.

You can do this with the RCOM Apple iPhone deal too. It’s an iPhone plus a very good network deal (unlimited country wide calls, SMS and 3G Data). Usually operators disallow unbundling – they lock the phone to the network SIM, meaning you can only use only their network on the phone for the term of the contract. But RCOM has specifically allowed the unbundling by not locking the phone and allowing the SIM cards to be used on other phones.

This means you can buy the deal, and then strip it into individual pieces. The iPhone 5S is worth Rs. 53,500 in the market. If you took the deal – pay Rs. 3,000 per month for 24 months – and sold the iPhone for a marginally lower number, you can get the network deal for the remaining term on whatever other phone you want.

The iPhone 5S 16 GB is about Rs. 44,000 in the US market, but the warranty isn’t valid in India. And you need a warranty – because you can’t even change the darn battery on your own. So let’s say the iPhone with an Indian warranty is worth Rs. 47,000. (Thanks @girishmallya)

The retail price of the iPhone is Rs. 53,500 so a lower price resale may be attractive. And you can sell it fully packed, with no restrictions.

So you sell the phone for Rs. 47K, and invest the money in a withdrawable fixed deposit or such. The money will let you pay the Rs. 3,000 per month for about 16-17 months (you’ll make some interest as well).

And after that, you pay another Rs. 22,000 (assume 7-8 months remaining, of Rs. 3,000 per month) – effectively you are paying Rs. 22,000 for 24 months of unlimited RCOM data, calls across the country and SMS. That’s less than Rs. 1,000 per month.

But it gets better.

Pre-Pay The Loan

We’ve noted that this RCOM-Apple deal is just like an EMI on your credit card for any other retail purchase. Since you pay the bank, the bank has no problem if you pre-pay your loan. They might of course demand a pre-payment penalty for early closure.

SBI charges 3%. Citi charges nothing. But assume 3%, on the total “loan” of Rs. 62,000. You’ll pay another Rs. 2,000. Which means you get the deal for Rs. 64,000.

Now you sell the phone for Rs. 47,000. You then get the "RCOM unlimited data/voice/SMS” deal for 24 months, for just Rs. 17,000 up-front. That’s less that Rs. 750 per month. Which, for a heavy user, is a pretty good deal.

The Caveats

Before you go ahead with setting up call centers through this setup, note carefully that if you use this for marketing calls, they’ll cut your connection.

This is just a workaround, but I’m sure if enough people think of doing this, regular prices in shops will come down (to Rs. 47,000?). In fact I would imagine that dealers themselves might take up this deal and resell iPhones at the lower price (if they can get takers for just the RCOM unlimited deal).

I’m reasonably sure Apple will not like this (i.e. resale of phones at 47K when the current market price is 53.5K) so you can imagine they will force RCOM to lock the phone in somehow.

Since RCOM isn’t selling these deals in all cities (notably, not in Bangalore, as they don’t have a 3G license there) the arbitrage may be to get the deal in Mumbai or Delhi, strip out the phone and sell it in Bangalore, while using the SIM cared in the city of purchase.


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