Ethio Telecom to Give Smartphones on Credit

With the main aim of boosting telecom penetration and smartphone usage, Ethio telecom is set to introduce a device financing model, where customers can get phones on a credit basis.

The state telecom monopoly designed the scheme for those who cannot afford a smartphone with two types of credit options. The scheme also aims at upgrading customers from using feature phones to smartphones. With the new scheme, the company hopes the number of smartphone users will grow to 60pc from 33pc.

To carry out the scheme, the company has approached phone suppliers, manufacturers, importers, assemblers, and financial institutions such as microfinance firms and banks to agree on credit arrangements, according to Ephrem Arefaine, chief marketing officer of Ethio telecom, which plans to distribute smartphones that can access 3G and 4G.

”The research we conducted showed us that many people don't have the financial capability to afford smartphones,” said Ephrem. "We're in negotiation with suppliers and financial institutions to get and supply the devices to customers on credit."

Currently, the company is offering mobile devices only in exchange for full payment. However, with the new offer, anyone can access the devices through credit under one of two plans. Under the first plan, a buyer takes the phone and pays for it in monthly installments. Under the second, payments will be done in the form of deductions, while the buyer uses internet, data and SMS services.

In both cases, the credit will be completed after one or two years as per the interests of the customer, who will also sign contractual agreements. The scheme is expected to be launched in a month's time.

The company aims to provide access to smartphones to people with low incomes that cannot afford to buy the devices otherwise, according to Frehiwot Tamiru, CEO of Ethio telecom, which reports that there are 56.1 million functional mobile phone devices in the country and only 33pc of them are smartphones.

“The new model will replace the previous device supply model that requires buyers to pay the value upfront,” Frehiwot said.