Nu Mobile Update - Using refurbished handsets to create an attractive bundled MVNO for consumers

Nu Mobile launches to market using Telstra’s network

Following our previous analysis of Nu Mobile and Mobile Network Virtual Operators (MVNOs), we produced this follow-on commentary considering that Nu Mobile has come to market with its offering. Nu Mobile has released its plan pricing and refurbished handset options for its bundled services. The MVNO will use the Telstra network to support its services, with coverage in Australian metro areas and large parts of NSW and VIC. Telstra currently has several MVNOs signed up for its wholesale services, including Aldi Mobile, Woolworths Mobile, Lyca Mobile, and Boost. Nu Mobile has an attractive and flexible pricing structure on recent generation smart phones.


Refurbished handsets are significantly cheaper than the retail price of the same model

The Nu Mobile plans will use Apple and Samsung devices as the handsets with customisable plans on top of the handset. The available handsets are come from the recent generations of Apple and Samsung mobile products. Each of the refurbished phones comes with a 12-month device warranty, similar to that of a new phone. The iPhones range from the iPhone 7 to the iPhone X and the Samsung handsets range from the Galaxy S7 to the Galaxy S8+. To illustrate potential discount when using Nu Mobile, the iPhone 7 32GB (cheapest of the iPhone range) costs $360 and can be repaid at $15 per month while you’re on a Nu Mobile contract, which is a 48% of the advertised price of the handset on the Apple Australia website of $749. The iPhone X is not sold through the Apple store anymore. For price sensitive consumers there is a significant discount when using the Nu Mobile plans for a bundling of handset and plan.


Nu Mobile offers flexibility in many ways including handset and data

Nu Mobile offers a range of plans that scale from 1GB per month for $10 per month up to 40GB per month for $50 per month, these plans also come with a one-off bonus data that ranges from 2GB on the cheapest plan to 80GB on the larger plans(1). An additional feature of the Nu Mobile plans is the ability to bank unused data from previous months and draw down on the data in months where the customer needs it. These plans are all focused on the more cost-conscious consumers with flexibility and convenience at the heart of the design. All Nu Mobile contracts don’t lock the consumer in and can be flexible with exchanging phones on certain terms.


Nu vs Telstra – similar metro network but significantly different pricing

The quantity of data available from Nu Mobile is significantly less than what is offered by Telstra so for the purposes of comparison, we will analyse Telstra’s 15GB per month for $50 per month plan(2). In order to create an apples-to-apple comparison Nu Mobile and Telstra, we will consider the iPhone 7 32GB handset(3) coupled with ~15GB plan per month. Telstra charge $25 per month for an iPhone 7 32GB handset, while Nu Mobile charge $15 per month. See plan pricing below.

Figure 1. Plan pricing for Telstra and Nu Mobile

All-in for a 24-month horizon, Nu Mobile will cost consumers $45 per month and Telstra will cost consumers $75 per month, that implies a 40% discount for Nu Mobile customers. Over the life of the 24 month contract, the Nu Mobile customer will save $720.


Highly dependent on the customer’s preferences

There a significant number of differences between Telstra and Nu Mobile that will factor into a consumer’s decision other than price, including coverage, customer service levels, bundling with other products, business or personal use, and adoption of new technologies (i.e. 5G) to name a few. However, in a recent Venture Insights report focused on MVNOs, Venture Insights noted that their survey of Australian consumers found that price was the number one consideration in consumer mobile purchases, which bodes well for MVNOs that can offer similar services at a discount to traditional MNOs.



Notes:

(1) the plans have a range of features that will not be discussed in this article

(2) higher monthly data plans have access to the Telstra 5G network, which Nu Mobile does not offer

(3) both carriers offer the iPhone 7 32GB


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