Device Financing for Telcos: Overview, Challenges, Solutions

Device financing or procuring devices on a contract/ pay-as-you-go model has been a norm since the last decade or so in the developed countries. In the developing world, however, this seems like uncharted territory. As telecom carriers take baby steps into mobile phone leasing in underserved markets, they are met with challenges. In this article, we will discuss the foreseen challenges faced by the telcos in device financing and how NuovoPay helps them.

Device Financing for Telcos
Device Financing for Telcos

Device financing: An Overview

The interception of mobile devices in human lives, in the day-to-day operations at work as well as home, has resulted in such ascending popularity that imagining a world without mobile phones is next to impossible. The growing perimeter of strong, reliable mobile networks adds to it. People are now connected to each other virtually from all corners of the world and the credit for the same goes equally to the telecom operators along with the mobile technology manufacturers. 

The increasing spectrum of mobile networks has grown from 2G to 5G, expanding the possibilities of what the internet and mobile devices can do for us. But this has also resulted in a major digital divide that can be observed between populations that do not have access to the best telecom network or the best mobile technology. Similarly, there is a huge population that is drawn towards constant upgrades to the latest technology handsets. What this means is that while one set of the population struggles to find technology, even the most primitive one, the other set of the population is all eager to grab the latest technology, no matter what price it comes at.

This is where device financing and handset leasing play a pivotal role. And who better than telecom carriers to take a plunge in the device financing market. This is why telcos have been at the forefront of device financing, where they lease out the device + telecom service bundle on a pay-as-you-go basis.

The rising prices of mobile hardware have already capped the profit margin that the telecom industry enjoyed from the said smartphone financing model. Also, for the expensive 5G network to garner popularity from the consumers, the devices they use should be 5G supported. Hence, telecom carriers want to aggressively go after the smartphone leasing market, but the road is rocky.

Device financing challenges for telcos

In geographies where there is no centralized credit system in place, the telecom carriers are taking an absolute risk by introducing device financing. The device once leased out to a user is untraceable if it goes offline. For devices that do not go offline but yet fail to pay the monthly EMIs, recovering the devices physically is a cost-draining endeavor. 

To add to it, as mentioned above, the primary profit-making element for telecom carriers is not the device financing itself, but the 5G or 4G service costs. To actually make device financing lucrative and to reap the benefits of handset leasing by telecom companies, the telcos have to ensure that the consumers stick around with the leased device as well as the pre-bundled service for a considerable period of time, if not forever. But if the consumers switch to an alternative network as soon as the initial lock-in period is over, the telcos essentially lose. 

The challenges of telecom carriers in device financing can be summarised as below:

  • Failed EMI payments 
  • Ghosting by the customers in the absence of a centralized credit scoring system
  • Physically recovering the devices that have defaulted payments
  • Customers switching towards other SIM service providers

How NuovoPay helps?

NuovoPay- a one of its kind solution that understands the pain points of telecom carriers’ steps in to mitigate the challenges of leasing smartphones. Here’s how NuovoPay makes it easy for telcos to make the device financing model lucrative:

  • Streamlined payment reminders – To ensure that payments aren’t missed, NuovoPay helps in streamlining regular payment reminders on the leased devices.
  • Remote device blocking – If the device payment has defaulted, the device access can be remotely locked from the NuovoPay dashboard, eliminating the need for a physical recovery agent. 
  • SIM-based locking – The device + SIM service bundle can be leased out with SIM-based locking technology. If the users remove the pr-bundled SIM from the device, the device access is blocked. 
  • Offline mode – The remote device blocking is available in offline mode, meaning even if the device defaults the payment and goes offline, the device access can be blocked. 

This truly serves as a win-win for the telecom carriers as well as the consumers. The users can enjoy the latest technology extended by the telco mobile phones along with 4G or 5G network services at a cheaper upfront cost. The telcos on the other hand can be assured of customer retention and make the most of device financing without risking their profit margins. NuovoPay revolutionizes the smartphone leasing model, de-risking it for telecom operators. 

Schedule a call with our implementation experts today!
https://nuovopay.com/book-a-demo/

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