Mobile Network Operator profitability in the mobile segment in Europe is under pressure, particularly in more mature markets where expensive handsets are often subsidised to drive growth in high ARPU post-paid segments. Handset subsidy was, until recently, considered as a good marketing and retention model for high value clients, despite its significant costs, these handset subsidies however weigh heavily on the MNOs’ balance sheet and are increasing in time, due to the high cost of smartphones.
In retracting device subsidy offers, operators have the potential to ease this financial pressure and lower the cost per customer acquisition. However, such strategic shifts can offer rewards but are never risk-free.
In the following paper we set out some of the key factors that we feel need to be considered by Mobile Operators, MVNOs and other players entering the device marketplace.
