Buzz Telecom has told Mobile that rising hardware costs are forcing mobile dealers to turn to SIM-only deals in order to compete with networks.
Describing this issue as the biggest challenge facing the market, MD Joe D’Souli explained that it is becoming even harder to make money from handsets.
He said: ‘The cost of hardware is a big challenge in the industry. Some networks are very aggressive in retaining their clients, so they will run at a loss for a period of time, and smaller companies like us can’t afford to compete at that level.
‘This has been an ongoing problem for many years but it’s got to the point where smartphones now cost about £600 per handset. For a dealer, if you do 10 devices at that price you’re running a £6,000 hardware fund before you can make any money at all. If it’s a small deal then it will be very difficult to make money out of that, so how do we make this work?
‘The only way is SIM-only deals, and we have to think out of the box, but more often than not the network will win. They have deeper pockets than us and can give out deals that we can’t.’
D’Souli explained that the unified comms dealer had struggled in the past to compete in the tough market and was forced to exit for a period. However, Buzz has used this to its advantage, diversifying into different areas that it is now using to strengthen its renewed focus on mobile.
‘As a business we’ve been involved in mobile for many years, but recently we’ve shied away because the complexity of mobile has gone beyond a joke, to be honest. There are very high hardware costs and the networks aren’t playing ball, they’re not rewarding companies like us to go out and obtain new business in the right way.
‘We’re now actively looking for mobile business; we do this with some conviction because we now have packages available to offer the client that make sense. Previously it was very hard work to do mobile and it’s come to the point now where there’s a lot of different packages that lend themselves to companies like ours.
'We’re in the business of sales, not in the business of running a mobile device – and that’s a distinct difference. The networks can afford to do things that we can’t and we’re always up against that, but in recent times we’ve been able to go out and be competitive.’