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BCG Forage Task 1

The document analyzes whether handset leasing companies would have profitable revenue and business models. It recommends pursuing this model for two key reasons: 1) Customers in Korea have shown increasing interest in leasing premium handsets. 2) There is a shift from prepaid to postpaid plans as SIM-only plans grow in popularity. Competitors Singtel and SK Telecom have launched leasing plans after experiencing slowing mobile revenue. Research also found that SIM-only plans generate lower average revenue than traditional bundled plans. Major US carriers like Sprint and T-Mobile offer leasing successfully. Based on these points, the author's hypothesis is that leasing would be a profitable business model with a positive estimated 3-year

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vibhu goel
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76 views1 page

BCG Forage Task 1

The document analyzes whether handset leasing companies would have profitable revenue and business models. It recommends pursuing this model for two key reasons: 1) Customers in Korea have shown increasing interest in leasing premium handsets. 2) There is a shift from prepaid to postpaid plans as SIM-only plans grow in popularity. Competitors Singtel and SK Telecom have launched leasing plans after experiencing slowing mobile revenue. Research also found that SIM-only plans generate lower average revenue than traditional bundled plans. Major US carriers like Sprint and T-Mobile offer leasing successfully. Based on these points, the author's hypothesis is that leasing would be a profitable business model with a positive estimated 3-year

Uploaded by

vibhu goel
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Hello Elisse,

Here is my report for identification of market trends on the impact of handset leasing

companies’ profit and revenue and coming to a point thinking it to be a sensible business model or
not. The companies I have researched upon are: Singtel and SKTELECOM. My recommendation is
that the company should proceed with this model as smartphone is the primary consumer electronic
device by units and revenues, its second hand market is a significant market in its own.

Below are the reasons why I recommend this model:

 Changing customer preferences:Our research showed that our customers in the


Korea have shown increasing liking for leasing of premium handsets.
 Re-allocation of pre-paid customers to post-paid as the popularity of SIM-only plan
increases.

What competitors are doing?

 It’s no coincidence the launches come after both Singtel and SKTELECOM suffered
slowing mobile revenue in recent quarters. Singtel reported a 5.7 per cent
year-on-year drop to SGD302 million in its fiscal Q4 ending 31 March. SKT’s Q1
overall revenue was dragged down by a 3.5 per cent drop in mobile service turnover
to KRW2.57 trillion.
 When SIM only plans and traditional bundled plans are compared for Singapore
Telecom Industry we observed that average net revenue for SIM only plans ($520)
is lower than traditional bundled plans ($980).
 Among the top four US wireless players, Sprint and T-Mobile (TMUS) offer leasing
plans. Verizon (VZ) and AT&T (T) do not. In fiscal 3Q16, which ended December
2016, the take rate of Sprint’s leasing plans reached ~43%. Net leased devices were
valued at ~$4.5 billion at the end of fiscal 3Q16 as compared to fiscal 3Q15, this
figure was ~$3.3 billion which shows market acceptance.

In conclusion, looking at the above points, our hypothesis is that this should be a profitable business
model to venture into and it is estimated that the 3 year NPV of this project will be positive

Sources:

1. https://marketrealist.com/2017/04/why-sprint-is-focusing-on-handset-leasing-to-accelerate-
growth/
2. https://www.mobileworldlive.com/devices/blogs-devices/blogs-handset-rentals-offer-
surprising-value/

Thanks and Regards,

Sai Vijay Bhupathi.V

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