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Telecom Profit: Handset Leasing Impact

The document recommends exploring a handset leasing business model based on its success among competitors and customers. Handset leasing could decrease phone prices by 50% compared to traditional plans where the user keeps the phone. This would make high-end phones more affordable and expand the market. Competitors have seen 25% of new customers opt for leasing and increased revenues compared to installment plans. However, the market is highly competitive and consumers can no longer sell used phones.

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Simon Ryd
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213 views1 page

Telecom Profit: Handset Leasing Impact

The document recommends exploring a handset leasing business model based on its success among competitors and customers. Handset leasing could decrease phone prices by 50% compared to traditional plans where the user keeps the phone. This would make high-end phones more affordable and expand the market. Competitors have seen 25% of new customers opt for leasing and increased revenues compared to installment plans. However, the market is highly competitive and consumers can no longer sell used phones.

Uploaded by

Simon Ryd
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Hello Elisse,

Here is my report regarding handset leasing and how it may affect profitability within the telecom
market. My recommendation is that we should defiantly explore this business model further as it
seems to be well received by competitors and customers as well the historical data shows that it has
been successful in many accounts in the market

Below are the summarisations of handset leasing:

High price increases in the handset market


● The market of new phones have increased over the course of a couple of years which has
caused many people to not be able to afford purchasing the latest models upfront.
● With handset leasing telecom companies can offer their customers a 50% decrease in price
compared to traditional plans where the user ends up keeping the phone after 2 years.
● This makes high end new models more affordable and expands the market for new
customers wanting the latest model without the high upfront costs
Competitors have introduced similar program and done well
● 25% of SKT’s new customers are choosing to opt into renting phones
● Market reached a valuation of $1,185.2 billion in 2020
● Sprint Corporation’s phone leasing plan has helped it regain its financial position as it
surpass its instalment plan model in 2020
● Competitors tend to save $100s per user when they combine handset leasing with a SIM
plan.
● There has seen rapid adaptation handset leasing in the market
Potential problems
● Highly competitive market with many competitors
● Consumers no longer can pass down the phone or sell it which reduces it lifetime value
● Increased capital expenses may cause cash flow problems but less likely in bigger operators

Overall, handset leasing should be explored further has the market is expected to grow with
changing behaviours with phone companies such as Apple continuously increasing prices to the
point where main consumers cannot afford. There is also a great deal of demand for young
individuals to have the latest model and with the ease of upgrading with the hand leasing plan, has
made it more desirable. When looking at competitors they have had great success with increases in
revenues and further demand with handset leasing compared with a decline in other instalment
plans.

Sources:
1. Blog: Are Smartphone rentals value for money?
https://www.mobileworldlive.com/devices/blogs-devices/blogs-handset-rentals-offer-
surprising-value/
2. Handset Leasing – The new saviour for teleco’s!
https://medium.com/@rutujdodal/handset-leasing-the-new-saviour-for-telcos-c9c968dd50b0
3. Risks and impact of handset financing: lessons from the US
https://data.gsmaintelligence.com/api-web/v2/research-file-download?
id=18809389&file=risks-and-impact-of-handset-financing:-lessons-from-the-us-
1482140001339.pdf
4. Why Sprint is Focusing on Handset Leasing to Accelerate Growth
https://marketrealist.com/2017/04/why-sprint-is-focusing-on-handset-leasing-to-accelerate-growth/

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