Impacts of A Handset Leasing Model On Mobile Telcos
Impacts of A Handset Leasing Model On Mobile Telcos
Impacts of A Handset Leasing Model On Mobile Telcos
on it (it gets them from place to place) and there are many
What will this do to KPIs of telecom operators? The KPIs most frequently used by analysts for telecom
companies are EBIT, EBITDA and capital expenditure. Under the new guidance the recognition of a right-
of-use asset and a lease liability will lead to depreciation and interest expense (which will be front
loaded), rather than the current (straight-lined) operating lease expenses. This change will result in an
increase in EBIT and even more so, in EBITDA.
‘The new leasing standard could increase EBITDA margins of telecom operators by an average of 2.5
percentage points
Mobile phone leasing is essentially finance, so you can expect to spread the cost of a
£749 handset over a term that suits (anything between 12 and 36 months). There will be
a rate of interest on top of the repayment, but nothing near what you might expect.
Leasing gives you the flexibility to keep or return the handsets at the end of the
agreement, it’s up to you. If you plan to return the handsets, this can open up even
more cost-saving discussions, such as applying residual values of up to 25% against
the expense.
The rental agreement available from Lease Telecom is fully tax deductible, so there’s
peace of mind for your Finance Manager when it comes to your company’s annual
return. Once you’ve decided on your handsets and selected the preferred term to lease
the handsets for, you are now in a position to shop for a SIM only airtime agreement
that suits your calls, minutes and data usage. Business SIM only plans are much more
widely available and can be sourced from us. Unlike network contracts, leasing
contracts do not carry large upfront costs.
So, with your new lease agreement alongside your new SIM only plan, you should find
you are much better equipped in both technological and commercial senses, and for
only a fraction of the upfront and ongoing cost compared to a one-size-fits-all network
agreement. Businesses tend to save £100’s per user when they combine a handset
lease with a business SIM only plan, so if there’s ever a reason to buck the trend from
previous mobile contract renewals, why not take a look?
Additionally, during the Deutsche Bank Media, Internet and Telecom Conference held on March 7,
2017, Tarek Robbiati, Sprint’s chief financial officer, spoke about the benefits handset leasing has
offered to Sprint: “We’ve been pretty good promoting leasing and allowing customers to benefit
from being always with the latest and greatest technology. And as a return to those forms we face
multiple choices available to us either we can sell those phones or we can recycle those phones and
give them a second life. And we have done so.”
Robbiati added that Sprint views leasing as a way to monetize assets multiple times over their life.
As an example, he said, “The phones that we get back are put back into the market for prepaid, with
different types of levels of guarantee.”
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