Signing up for a monthly wireless contract to get a subsidized iPhone is common in the U.S., but in India, Apple (AAPL) fans are accustomed to paying the phone’s full price. In November, Reliance Communications (RCOM:IN) (RCom), India’s third-largest mobile operator by market value, became the first to hand iPhone 5Cs to customers willing to commit to 2,599 rupees ($41) a month for 24 months. Gunjan Hasan, who got one at an RCom shop in Mumbai, says she’d been putting off buying a phone because of the upfront costs. “When you have a family and other expenses, you really need to think before paying up to 50,000 rupees [about $800] or so for just a phone,” says Hasan, 36, who works at KSA Development Venture, a teacher-development company in New Delhi.
The subsidies are part of Chief Executive Officer Gurdeep Singh’s plan to reduce RCom’s dependence on low-margin users. India is the second-largest mobile market after China. In the fiscal year that ended in March, its active subscribers hit 788 million, up 37 percent in two years, according to the Cellular Operators Association of India. Most of those users, however, have cheap voice-only plans; India market leader Bharti Airtel (BHARTI:IN) averages $3.10 per subscriber each month, compared with $8.80 at comparably sized China Telecom (728:HK). Subsidies may nudge shoppers toward pricier data plans, Singh says: “We are hungry for growth, and this could be the tipping point.”

If he’s right, RCom could help solve an ongoing headache for telecom operators in the world’s fastest-growing smartphone market. With the country’s mobile users accustomed to paying less than a penny a minute for voice calls, India’s operators make far less per customer than their international peers. Averaging only $1.60 a month per user, compared with $69 for U.S. companies, Indian operators have slashed data fees by as much as 90 percent, betting cheaper rates will help fuel a rise in mobile gaming and social networking. RCom’s average revenue per user jumped 26 percent, to 120 rupees ($1.92), during the three months ended in September. To increase averages further, the company said in a Nov. 5 statement that it had disconnected 10 million “unprofitable, low-end subscribers.”

Most Indian operators are counting on devices cheaper than the iPhone. High prices have kept Apple a distant No.