Is A Free Handset Worth 2 Year Commitment For A Postpaid Line?
Short answer is: No, especially if you are afraid of commitments. As you may have noticed in the newspaper ads or billboards, Ufone has partnered with Habib Bank to offer free handsets to new or existing customers of HBL credit card who agree to get a Ufone post paid connection package for a two year commitment. Customers will have to pay their bills through HBL credit card. This seems to be a departure from the usual deals, in a market where people are used to switching phones freely and after relatively short period of time.
It looks like someone in Ufone has taken this straight out of the playbook of a US telecom company. The business practice of giving free (or subsidized) handsets to lure customers into long contracts is pervasive in the US. Most consumers like getting free handsets of their choice but no one likes the accompanying contracts and the terms and conditions. There is usually a fee associated with early termination of the contract. Recently there has been plenty of consumer resentment against these contract based offers and more mobile carriers have started offering more month-to-month packages.
In this particular of Ufone and HBL, there are a few things which the buyer should be beware of. First, I would strongly caution anyone against getting one more credit card just for the sake of a free phone. Now let’s analyse the offer. The total cost of the two year line commitment can be so high that it may not be worth the free phone. There are five plans to choose from with line rents varying from 599 to 3499 Rs and include airtime and sms buckets. The handsets range from Nokia 1680, 2630 to Samsung M150, G800 to Blackberry models etc. Higher the line rent, better is the handset. Customer’s monthly charges will appear automatically on the HBL Credit Card statement.
The customer will be required to adhere to the terms and conditions of the contract for a two-year period which is a very long time for Pakistani market. If you change your mind before you complete the two year contract, there will be a penalty.
Consider this example of package number 5 which has line rent of Rs.3499. Over two years, it will be almost Rs. 84000. Then there are the details of included minutes and sms …. the usual stuff which goes along with these packages.
Unless you have performed the calculations and are convinced that this is a good deal for you, I would not advise going along with this kind offer. You are probably better off living the free life which you are already used to.
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Tahir, I agree and that is why I am seriously considering this Ufone-HBL plan. When I see other telcos plans, I can’t find such low rates or stylish phones. Zong gives a free toy (because it can not be called a phone on any planet) and Ufone gives free minutes with RBS but no phone. Even on a per minute rate, Ufone and HBL credit card deal is better and the phones offered are definitely the icing on the cake.
As Jamal says, the issue is the 2 years contract! If they had allowed me to upgrade every year, it would’ve been a perfect deal.
I like the fact that there is a flat bill every month that will be a part of my credit card’s bill because it’s such a pain to pay my phone bill and also avoid blocking. I won’t have to run to my service provider to pay my bill anymore.
I agree with Babar that Ufone has taken this service perhaps straight out of the playbook of a US telecom company but then isn’t this how handsets are being offered in UK and Europe and elsewhere in the world as well? The offer would have been better had it involved the line rent of 1 year only just like the norm in other countries. However, a credit check is mandatory even abroad and considering the mindset of us Pakistanis a credit card looks a better way of making people pay the dues every month instead of running away with the handsets.
I personally applied for a HBL credit card and ufone’s handset offer a week back..all formalities were completed and i got a handset yesterday (Samsung M620) and mashallah i am very happy with it.
Just give this offer another thought…you pay 999 per month (package 2) and you get 1000 minutes free (Ufone to ufone) and 100 SMS free to any network. on top of that calling rates to both ufone and other operators are way too cheap..Rs 0.35 and Rs 0.90 respectively..calling ptcl numbers nationwide is cheap as well Rs 0.65..and ON top of that you get free missed call alert service, phone book saver service and 1000 ufone reward points..PLUS YOU GET A FREE HANDSET…:)
i think the offer is good..i have only issues with 2yrs contract..1yr contract would have been great.
I agree with you Babar. The major portion of the users here are youngsters and most if not all use prepaid connections. I would assume that their would be 5-10% post paid users overall. So this offer is flawed to start with.
Good points Jamal. Zong offers a package where you can get a handset and 6 months of service for 2K Rs. Warid has started a similar offer. In my opinion, these kind of phone sim minutes no-contract needed packages make more sense for an emerging telecom market like Pakistan. There might be a very small number of people who like instant gratification and may want to try the 2-yr contract just to get a nice handset. I do not think that this will be popular with the main public.
Salman,
Being from the IT Services industry, I am aware of the profits of telcos and fianancials and by looking at their IT budgets, I can safely say they are certainly not ’slim’.
Mobilink offers subsidized Blackberrys to its customers don’t they. Why can’t others do something on those lines? We wont be having so much competition in telco if it weren’t for the huge customer base. People change their handsets VERY option in Pakistan. I remember when in UK I used to wait till the end of my contract for a FREE upgrade to a newer phone. People don’t wait around here in Pakistan. If theres something new and exciting and they’ve got the doh, they’ll get it. Why the telcos are not tapping on this huge opportunity is beyond me. They would easily do some sort of a venture with a handset manufacturer and provide subsidized sets. I would not mind topping up on a regular basis if I can get a new handset 10-20% below market price. But being tied to a two year contract would be a bit much. I might consider if the contract was of a lesser duration for instance 12 months.
Another thing to mention here is that airtime is cheap here and don’t forget that telcos pay per second and charge by the minute on most if not all of their call options.
Jamal,
The profit margin for telco’s in this region is quite slim, also on the other hand western markets are much more developed in terms of infrastructure and organizational maturity. Here the operators are still trying to get even on there investments, plus the ever need to catch up with the new and upcoming technology has made things even more difficult for operators in the local market.
In my opinion asking for flashy insentives for just signing up for a contract will be pushing the limits… especially in these tuff times when operator costs are at their all time high due to fuel, financing costs and other issues on the horizon.
I would be very interested in finding out how one can get out of a contract. How much would one have to pay as penalty for early termination? Would they let me keep the phone if I change my mind and end the contract after couple of months? I would not even consider this offer until I have some solid answers.
In Europe and America, banks and telcos offer huge incentives to new customers. I’ve seen ppl get free LCD TVs just for signing up for a new credit card! Maybe its time the financials institutions and telcos dish out some better offers here in Pakistan as well.