Home Credit looks to US launch

02-10-2015

Czech loans company Home Credit has announced a radical departure from its past business model, which previously focused on developing markets. Now it’s teamed up with telecoms giant Sprint with the intention of making a creditable impact on the US market.

The PPF group of the richest Czech, Petr Kellner, and partner Jiří Šmejc has previously focused on developing countries to roll-out his loans company Home Credit. Belarus, Russia, China, Vietnam, India, and Indonesia, are some of the countries where the formula has been rolled out.

But a new departure has now opened up for a tweaked version of the loans formula to be launched in the most developed country of them all, the United States. Home Credit has teamed up with the fourth biggest mobile phone company on the US market, Sprint, to launch a company offering credit to buy phones.

Home Credit will retain a 50.1 percent stake in the joint venture and management control of the venture.

The main advantage for the Czech company is easy access to Sprint’s 57 million customers on the back of a well known and trusted brand. A spin off plus for PPF, which is now the owner of the O2 telecoms company in the Czech Republic and Slovakia, is the entry it gives to mobile know-how in one of the most advanced and sophisticated telecoms markets in the world.

Home Credit is looking to widen the range of loans offered for phones to a riskier section of customers than Sprint would contemplate on its own. Home Credit boasts that it has a good record extending loans to customers in developing countries where only patchy credit records exist., And, in time, it wants to offer a wider panoply of loans not tied to specific purchases and even offer credit cards to customers.

Size-wise, Switch and Home credit both have just over 50 million customers worldwide. Both companies are also under some pressure. For Sprint, its been making consistent annual losses since 2007. Chief Executive Marcelo Claure was bought in almost a year ago to try and turn the company around while taking advantage of its solid infrastructure assets.

Home Credit meanwhile is suffering from mounting losses on the soured Russian market, partly due to the local economic turndown there but also, it would appear, from the company’s reckless willingness to offer loans to high risk prospects.

Some of the damage there, amounting to 90 million euros in the first half of the year, has been balanced out by Home Credit’s success in opening up the Chinese market and prospects in India, where the company is slowly expanding its market base after three years on the ground.

02-10-2015