I currently have two CAP19 Sim cards for myself and girlfriend as we aren't heavy mobile users and these plans suit us perfectly, due to the discount for having our ADSL with exetel as well.
I'm all for exetel selling phone handsets outright and on contracts, though these days contracts are starting to match outright handset prices + exetel's cheap plans.
If exetel does enter into this market, your prices are going to have to be competitive.
You mentioned Galaxy S for $600.
My girlfriend ordered that phone two weeks ago from Smoothmobiles (Hong Kong model with a 12 month AUS retailer warranty) for $450 inc shipping
Allphones are currently selling it outright for $519 + shipping.
Or Virgin on 24month contract for $840 (comparable plan to exetel's CAP19).
So outright on exetel for $600 + $216 (24 x $9 CAP19 (inc ADSL discount)) = $816, without discount = $1056.
I personally am also holding back as long as I can from purchasing the Galaxy S II from overseas online retailers as I can get it shipped to my door for under $700
Summing up... In my experiences with friends and work colleagues. If they want a phone contract, they go to Optus, Virgin, Telstra. If they want outright, they are looking for the cheapest available price and won't disregard purchasing from overseas. So good luck exetel, it's a tough market whichever move you play.
PS: depending how both of our usage patterns change now we will both have Smart android phones
we may have to upgrade to the CAP35 plans, 200MB ain't all that much.