Resellers are using smartphone leasing to compete with UK networks for business contracts, Lease Telecom has told Mobile.
Founder Simon Fabb said leasing was an attractive option for resellers as rising hardware prices make it tougher to compete against larger players.
The company works with banks to provide finance to mobile dealers who then lease mobile devices to its clients. Lease Telecom takes on liability for payments, with partners to be paid up-front.
‘There’s been a shift,’ Fabb said. ‘Handset prices for iPhone devices have sky-rocketed – five years ago top-end devices were £350 to £400 and now the cheapest iPhone starts at about £450 goingright up to £650. That’s a lot of money now for the partner to fund.
‘Resellers love the idea of leasing – it’s pretty new in the mobile sector. Small partners that historically wouldn’t be able to compete are now able to, so for everyone from entry-level to established resellers, this just gives them an extra solution in the kit bag.
‘One of the biggest challenges is where partners are on a revenue share model with a network. They are getting a higher percentage of commission overall but have it drip fed to them monthly. So if a customer says: “I want an iPhone 6s with every connection”, who is going to front that? In most cases, for a top-end device deal, the commission won’t cover the cost of the device up-front, so there’s a real challenge there. The partner has to bankroll the difference.’
Speaking to Mobile at the beginning of 2015, Fabb revealed ambitions for Lease to gain 100 partners by 2016. Having successfully achieved that target, the business will now focus on educating partners on the benefits of leasing services.
‘Leasing hasn’t really ever been in the market,’ he said. ‘There wasn’t any financing offered on smartphones. Now that it’s in the market we need to educate and say to our partners “actually you can use leasing for large mobile transactions”.
‘Once we get in with the partner and they understand the solution, our leasing is total to the market,and they can start looking at more solution selling and not just mobile. They start thinking about what else they can wrap into a lease. No one offers monthly iPad options or computing so it actually makes them a lot more agreeable to customers. The monthly pricing model is relevant in the consumer market and this has transcended into business.’