Macquarie Group has taken the telco giants by surprise with news breaking that it will enter the Australian market as a virtual retailer with a used smartphone and SIM bundle strategy.
Financial giant Macquarie Group is set to enter the mobile telecommunications market with a new offering it is branding ‘Nu Mobile’.
The existence of Nu Mobile was first reported by the Australian Financial Review last week. The AFR reported that Australian Securities and Investment Commission (ASIC) documents were the revealing factor in uncovering Macquarie Group as the holding company of Nu Mobile, as the brand itself has no identifying markers.
A placeholder website for Nu Mobile is live, simply noting that the service is “coming soon”.
The registrant and domain administrator of the website is “Macquarie Group Limited”, while an examination of the site’s source code shows the “coming soon” images were added to the site this month.
Macquarie Group has declined to comment on the AFR reports.
Nu Mobile will operate on Telstra network
AFR reported that Nu Mobile will operate as a mobile virtual network operator (MVNO) on Telstra’s mobile infrastructure.
It will not offer SIM-only plans, but instead bundle a SIM with a pre-owned smartphone. Nu Mobile will be an online-only retailer.
Though telecommunications is not Macquarie Group's traditional area of expertise, its move into the market is logical because the financial services giant already runs an extensive smartphone financing business, leasing more than a million smartphones to telcos such as Telstra, which then lease them to customers.
This means Macquarie owns a large stockpile of used phones in good condition.
'Used phone on plan' model first in Australia
The "used phone on plan" model does not yet exist in Australia, but has been successful in the US, where it is offered by major telcos including AT&T and Verizon.
Macquarie leases handsets to retailers who then lease them on to consumers who are required to return them after one or two years depending on the contract they decide to go with. These deals usually result in a cheaper monthly fee for the handset, given they don't get to hold onto it once the contract is up.
Vodafone and Telstra confirm also "open to used smartphone" deals
Vodafone, Australia's third biggest mobile carrier, said it was looking at options to launch some sort of used smartphone deal.
A Telstra spokesman also confirmed it was open to the model. "We don't currently sell second-hand devices direct to customers but we are always listening and working with our customers and would consider our options if it is something they wanted," he said.
What happens to old smartphones?
The first decade of the smartphone era was characterised by quick upgrade rates as the technology rapidly improved and the hype, particularly around Apple products, endured. But in the past year there have been clear signs that trends are changing. Telstra confirmed this.
"In relation to customers holding on to devices for longer we know some customers are definitely doing this, with many taking advantage of phones becoming more durable and some are also passing devices on to other family members.
"However we still see many customers wanting the flexibility to upgrade their handsets as the latest come out."
Vodafone Chief commercial officer, Ben McIntosh, said customers who owned their own phones were following three courses when they upgraded. Either they left them in the drawer, passed them down to family or friends, or traded them in. But he said consumer awareness of the value of the phones was rising.
"Customers are becoming more and more aware that their phones after two or three years are still worth considerable amounts of money, and they’re no longer just leaving them in a drawer," he said.
All three major mobile carriers offer trade-in deals to customers, who can hand in their old smartphones and have the cost credited to their account, rather than provided in cash. The carriers will sell these on to third parties, who will erase and refurbish them and sell them in markets such as India or Africa, where there is a strong market for used smartphones.