Device financing has been garnering eyeballs as one of the most lucrative models to make the most use of the unused device inventory and tying it to the users who need access to the devices. With device financing, reaching out to the right set of users who are in constant need to upgrade to the latest tech without burning a hole in the pocket or accessing affordable device usage with low upfront costs is possible. This is why device financing and leasing have been gaining momentum across geographies that were previously deemed to be unfit for the leasing market.
Learn more: How to Lease Out Devices with NuovoPay?
Telcos and device financing: An appealing endeavor
Telecom carriers have a huge advantage over other device financing companies, such as the OEMs or financial institutions because they can pre-bundle a service along with the device to be leased out. They can upsell their device services or carrier services and it is a complete win-win, not to mention the competitive advantage they get over other telecom carriers who do not bundle services with device leasing.
When it comes to making the latest tech such as 5G more prevalent, the telcos have to enter the market to make 5G-friendly and 5G-compatible devices more accessible to leverage the rising 5G prices. Device financing is a great way out-the users can have access to phones that are compatible with 5G and telcos grab more consumers for their 5G services.
The challenges
While this seems like a lucrative model, which it is, it can go severely the other way round if the leasing model is flimsy. The money-making or sustenance factor of the device financing model initiated by telcos is hugely dependent on the consumers choosing to use the carrier service imbibed by the telcos with the financed device. But there are obvious caveats that can ruin the model.
If the financed device + SIM combination is not governed with a strong device financing system, the users are free to discard the SIM card after the initial, mandatory lock-in period and replace the service with a cheaper alternative. Now, this can totally diminish the profit margins of the telcos who are into device financing. The smartphone market is dynamically changing and with the increasing costs of procuring the device hardware, especially with the latest technology, the profit-margin is plummeting beyond means. The telecom operators have to take the hit if they want to continue device financing, specially bound with expensive 5G services.
The consumers can switch to other operators, or downsize their services to 4G with another telecom provider while using the device financed by another telecom carrier. In these cases, the telecom carrier one has no meat in the device financing model.
Enter NuovoPay
NuovoPay de-risks the device financing model for telecom operators with its cutting-edge SIM-based locking technology. With NuovoPay, telcos can regulate device financing, making it a lucrative option. Here’s how NuovoPay helps:
- The telecom carrier finances a device along with pre-bundled SIM services.
- The consumer continues to use the device with the SIM services.
- If the consumer switches to another SIM provider and ejects the SIM from the device, the device access is blocked with NuovoPay’s SIM-based locking.
Tying the device financing model to SIM-services helps eliminate the risk of consumers switching to other operators in the long run and makes the model as cost-effective as it should be for the telcos.
With NuovoPay, telcos can truly eliminate the challenges of device financing and approach the smartphone leasing business with a new perspective.
