Device financing: why instalment plans are often closer to money than the super app

What gets forgotten in telco fintech discussions

When telco fintech is discussed, most attention goes to wallet, super app, marketplace. Ambitious, salient, headline-grabbing.

Meanwhile one fintech opportunity that usually builds cheaply and produces revenue fast — device instalments. A smartphone in Uzbekistan typically costs 2-6 million UZS, meaningful for most customers. Instalment makes the purchase accessible, the operator earns revenue (interest or service fee), and the device contract physically anchors the customer for 12-24 months — a major retention mechanism.

In most regional operators device financing already exists in some form, but usually:

Limited to top-tier devices. Only premium phones in instalment.

Conservative credit policy. Strict requirements drive a high decline rate.

High interest rates. To cover default risk.

Limited operational integration. Financing exists in parallel to the main tariff, not bundled.

Underleveraged for acquisition. Not actively marketed as an acquisition channel.

These limitations are often due to risk aversion and weak credit infrastructure. A serious upgrade is a major opportunity.

What changes with well-designed device financing

A full portfolio. Devices from entry-level to premium. Entry-level financing with small ticket — important for youth and low-income segments.

Risk-based pricing. Not one rate for all. Customers with good track record — better terms. Customers with less established history — higher rates or guarantor required.

Bundled with tariff. Device financing plus tariff package with unified billing. A clear value calculation for the customer.

Trade-in programme. The customer can trade in the old device for a discount on the new one. The upgrade story creates ongoing engagement.

Insurance bundled. Device insurance against damage, theft, loss — bundled with financing. Protects the asset, the customer, the operator.

Default management. Process for customers struggling with payments. Restructure options. Bad debt management.

Each element requires operational maturity — credit assessment, insurance partner, retail process, billing integration, customer support training.

Where revenue is usually lost in device financing

Several typical issues:

Approval rate too low. Conservative scoring rejects many profitable customers. Lost revenue.

Interest rates too high to compensate. Customers refuse — competitor financing.

Manual credit assessment. Slow processing — the customer leaves.

Trade-in programme limited. Customers do not return for upgrade — single transaction.

Insurance not actively sold. Lost cross-sell opportunity and default risk for customers without protection.

Marketing pull limited. Financing not actively positioned as an acquisition tool.

Each is an improvement opportunity.

What is needed to upgrade device financing

Modernised credit scoring. Not only historical data, but behavioural signals — usage patterns, top-up patterns, contract history. ML-based scoring delivers higher approval at the same default risk.

Partnership with a financing institution. The operator should not carry risk on books. Partnership with a bank or specialised financing company — better economics for the operator.

Integration with billing. Financing payments through the telecom bill — convenient for the customer, lower default risk.

Insurance partnership. Embedded insurance with financing — single signing process.

Trade-in operations. Process for receiving old devices, evaluating, refurbishing (or wholesale-selling), crediting the customer.

Marketing positioning. Active in acquisition campaigns. Financing as a differentiator, not a secondary product.

A realistic upgrade roadmap

Months 1-6. Foundation. Credit scoring upgrade. Partnership with a bank or financer. Insurance partner.

Months 7-12. Pilot. Refresh the financing programme in one region or one customer segment. Measure approval rate, default rate, customer satisfaction.

Months 13-18. Scale. National rollout. Trade-in operations. Marketing integration.

Months 19-24. Optimisation. ML scoring refinement. Insurance attach rate growth. Partner negotiations for better economics.

By two years in, device financing is a meaningful fintech revenue stream and a strong retention mechanism.

What often goes wrong

Default rate too high. Conservative scoring relaxed without adequate validation. Significant losses.

Partner relationship strained. Operator wants higher commission, partner wants lower default risk. Misalignment.

Trade-in operations do not scale. Refurbishment overhead higher than expected. Programme cancelled.

No insurance attach. Customers default on financing for damaged devices — losses higher than necessary.

Marketing positions financing as “debt”, not “access”. Customer perception negative. Less acquisition impact.

When not a priority

If consumer credit regulation is unclear or changing, risk is hard to quantify.

If no good partner is identified and internal credit operations build is expensive.

If retail network is limited and device sale points are constrained — financing reach is low.

If the competitive landscape for device financing is already saturated, incremental customer acquisition is hard.

If the organisation is in an acute phase of other transformation initiatives, bandwidth issues.

Discussion points for the committee

What is current device financing volume and approval rate? And default rate?

Which financing partnerships have already existed or been identified?

What is the credit scoring approach — manual, basic rule-based, ML-based?

What is integration with marketing — financing as an acquisition tool or secondary?

What 18-24 month investment commit is needed for a serious upgrade?

How SamaraliSoft can help

Device Financing Programme Upgrade — analysis of current programme economics, design of upgraded credit scoring and risk model, partnership strategy for financing and insurance, operating model design including trade-in operations, marketing integration, and a phased rollout with a regional pilot in 6-9 months before national scale.

Related reading

• /en/insights/telecom-arpu-bundles-devices/ — ARPU growth
• /en/insights/telecom-device-lifecycle/ — device lifecycle
• /en/insights/telecom-wallet-or-bills/ — wallet vs bill payments
• /en/insights/telecom-retention-economics/ — retention economics

Sources

• Central Bank of Uzbekistan — biometric verification for digital banking
• Ministry of Digital Technologies — telecom infrastructure UZ
• Digital Government Portal — digital infrastructure UZ
• UzDaily — telecom market
• MNP.UZ — number portability