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‘Buy-back, trade-ins reduce weight of subsidies for mobile operators’

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The increasing weight of smartphone subsidies on mobile operators’ profitability and the growing demand for used smartphones in emerging markets create fertile land for buy-back and trade-in programs, according to a new market insight.

“Through these programs mobile customers are encouraged to sell back their old smartphones to the operator in exchange for cash, service vouchers, gift cards and such,” explains Stela Bokun, Senior Analyst at Pyramid Research.

In Analyst Insight: Buy-back and Trade-in Programs Reduce the Weight of Subsidies for Mobile Operators, the research company identified that these second-hand devices, which must be in decent shape, are subsequently refurbished and sold back to other customers, typically in secondary (i.e., emerging) markets, instead of just being recycled.

Pyramid Research reckons that the setup helps improve operators’ churn metrics, since customers often opt to use the reimbursement received in the store for the returned handset to cover the upfront cost of acquiring a more recent model of the same handset brand.

“In essence, the program provides the incentive for customers to upgrade or renew their contract before the previous one expires,” she says.

This Analyst Insight draw’s on Pyramid’s recent report, Smartphone Strategies: How Devices Can Revitalize the Role of Operators in the Mobile Ecosystem, which shows how a mobile operator can use its device strategy to reposition its business in order to both defend itself against damage from the smartphone revolution and to make the most of the many opportunities the revolution has ushered in.

It also examines strategies such as device portfolios, smartphone distribution, subsidies, buy-backs, trade-ins, reverse subsidies, own-branded devices, handset financing, data-sharing, tablets and over-the-top (OTT) services.

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