Hello Elisse,

Here is my report for our client company: CompanyX regarding whetherthey should
introduce handset leasing . My recommendation is that they should proceed with investing in
handset leasing to customers which can result in roughly additional Rs 97 crore next year.
Below are the reasons why I recommend this move:
Regarding the Market:
1. For Indian telecom market, present CAGR is around 18.3 % and expected to grow
around 18.5% or more by the end of 2020 as it is experiencing more number of
subscribers base expansion.
Applying Porter’s five forces:
Supply: Cut and throat competition among telecom companies resulted in prompt service to
customer base
Demand: Low tariff and low rural and semi urban penetration levels resulted in higher
demand in foreseeable future.
Barriers to entry: Regulations, high capital investments , low tariffs etc
Bargaining power of suppliers: Improved competition has led to bargaining power for service
providers
Bargaining power of customers: Wide variety of choices availability resulted in bargaining
power of customers
Competition: Customers low switching cost and price sensitivity has resulted in intense
competition.
Keeping everything in account, telecom industry is likely to accelerate in coming years also.
2. As per my knowledge, for buying on a plan, customers has to remain on same mobile
plan for duration of contract like 12 months, they do not own the phone until contract
has ended and buying outright is more advantageous when you pay full cost of
upfront like you pay cash and own the phone and then you have chance of using any
mobile plan.
In India, competitors are getting more advantage of leasing phone on contract, as
customers base becoming larger because people likes to have good deal for new
phone plan that will be cheaper( Most popular phones costing more than $1000) than
getting it outright. As there were many latest releases by big brands competitors
targeting for bigger customer base for earning more profit.
Regarding Consumers:
Handset leasing is helping in many way. First of all, customers are getting good deal for new
phone plans that is relatively cheaper and they thrive for latest releases. It is helpful who
cannot afford upfront specially they want to move into new model. And moreover, they look
for extra data, unlimited calls and texts.
This service is relevant for smartphone market.
I mentioned about bargaining power of customers so handset leasing in giving autonomy to
customers in many way to choose new models after contract is ended rather than paying
upfront but if we see macro trend considering myself as customer I want to switch in to
different telecom service carriers rather than sticking in to one for a year. If I go out before
contract ends I have to pay early terminaton fees which I do not want. And if I go for buying
phone outright, I will move for better plan where I am no more in contract.
Regarding Competitors:
Rentmojo has adopted handset leasing , the company will allow consumers to get
samrtphones on lease through RMI.
Rentmojo allows person renting handset for roughly one year and pays half as such RMI.
According to them, customers usually changing smartphones every six months and this
would help them to upgrade with latest device at lower cost.
Rentmojo trying to improve its customer base which is around 50000 by 50% in next few
quarters and they are also looking to partner with e-Commerce portals to offer RMI option to
their customers.
Regarding profits:
Presnt profit is around Rs 118 crore and if it is implemented company may increase customer
base by providing experience differentiation and obviously in India majority of people comes
under middle and low income level which will obviously shift from rest to handset leasing as
it can be easily affordable and it can increase additional profit of Rs 97 crore/year.