Mobile phones are no longer a luxury, even in the geographies that were once underserved in terms of technology. The proliferation of mobile phones across diverse avenues has led to a transformation that was inconceivable, a few years ago.
Mobile phones- the new normal for Africa
In Africa, the mobile phone market is heavily driven by the large population of the youth, today have access to a smartphone. According to a study by the World Bank and African Development Bank report, there are more than 650 million mobile users in Africa.
Clearly, the African market is more than ready for a revolution that not only subsidizes the cost of mobile phones, which will curb the digital divide within the continent but also opens up new avenues to the growth of the local youth population.
But the question is, are the youth able to afford to acquire the latest mobile tech available. A report by Praekelt foundation suggests 95% of South African youth are making use of prepaid or ‘pay-as-you-go’ plans, with the remaining 5% being on long-term contracts. Device leasing which involves mobile handsets coupled with telecom service is a lucrative option for the population that wants to access mobile tech at a smaller upfront cost.
Device leasing by telecom operators: The challenges
The rising costs of smartphones are one of the key reasons that pose a conundrum when it comes to device leasing. The cost of smartphone production which newer technologies such as 5G has led to an overall increase in the cost of the phones, narrowing the profit margin obtained by the telecom companies from the bundled solution of handset + SIM services.
As telecom companies venture into device leasing in markets such as Africa, they are met with several auxiliary challenges- first is to ensure that the users stay on their platform after the device is leased because once the device is leased, the SIM card can be ported to another operator. This is crucial to ensure that the telecom companies acquire and retain users onto their SIM services and the leasing model is profitable for the telecom company.