The telecoms sector is admirable in its pursuit of sustainability – but this is at least in part motivated by the sheer cost of constantly replacing network equipment and devices as they slide into obsolescence. While manufacturers are increasingly focused on extending the lifespan of equipment, this does not negate the issue of recycling outdated gear.
Given that the majority of carbon emissions associated with technology are produced during the manufacturing process, refurbishing physical technology – whether consumer devices or network equipment – is one of the most effective ways for tech companies to reduce their environmental impact.
This drive to achieve a more circular economy has led to a flourishing international market for refurbished network equipment. Operators are keen to ensure that their outdated equipment does not represent a sunk cost, so there are both financial and green incentives to pursue this strategy.
Julia Evans of TXO, a sustainability-focused firm which refurbishes and resells network equipment, explains that the company has developed a ‘carbon calculator’ to outline the quantifiable carbon savings available to clients who purchase its equipment as opposed to newly manufactured products.
The idea of TXO’s carbon calculator is to underline the relationship between financial savings and environmental impact – for example, not having to mine rare minerals from original sources delivers both benefits. Historically, it's been seen as a financial drain to take a more environmental stance, whereas this is cost positive: operators are making savings by buying from the circular economy, all equipment is tested and certified functional. Evans notes that this will stand up to audit – TXO has partnered with The Carbon Trust to ensure that industry experts have led on the process for the methodology and how it is calculated, ensuring that it cannot be labelled as a greenwashing measure.
“The demand is increasing”, explains Evans, noting that larger telcos are recouping money by selling functional equipment that they no longer use. This is typically acquired by alternative network providers – going via a reseller is easier, quicker, and a lot cheaper – but larger companies are starting to buy refurbished stock as well. “It really is creating the circular economy – and it’s getting bigger and bigger”, says Evans. TXO is able to both refurbish and repair equipment effectively – and when products are at the end of their lifespan and there’s no market for them, they can be recycled. Evans explains that network cards contain gold, silver and palladium that can all be recovered and reused.
Emerging markets are unsurprisingly a major buyer. “A lot of our refurbished equipment goes into those regions whereby they’re a couple of networks behind [more developed markets]”, explains Evans. “We can provide whole networks, in some cases – there are big players upgrading, and this [equipment] would just go to waste if we weren't here to find these emerging markets and sell to them.”
“It really is an interesting market to be in, because you've got these big players that are firing forward with all this new technology and upgrading all their networks, then you've got these people coming behind, we're facilitating that - and we can actually develop networks with people. We can build cabinets, and deliver whole units, built to customer specifications.”
This is particularly useful in markets where legacy architecture is scarce or underdeveloped – but acquiring a whole network presents issues in terms of support. Evans explains that TXO is able to provide operators in emerging markets with technical support for outdated equipment that is no longer officially supported by its original manufacturer, enabling manufacturers to extend the lifespan of their equipment without needing to divert resources for support and repair. This kind of circular economy delivers huge financial benefits – manufacturers have millions of assets globally, and need to see some return on this investment. Expanding the lifespan of equipment in an industry that continually chases the new is one way of doing this.
Recycling equipment and resources makes business sense – Evans gives the example of Deutsche Telekom’s initiative to recycle copper from older infrastructure, which provides enough money that the network essentially pays for its own upgrade. “It's financial, but it's also massively positive sustainability messages as well that come from it”, says Evans. “We're trying to reduce the waste in total and trying to make sure we get absolute maximum value for every piece of equipment that's put on the market, not just in terms of financial but also in terms of those natural resources that are used up when manufacturing it.”
This message is not just resonating in the network equipment space – it’s coming through loud and clear on the device side of things, notes IDC analyst Francisco Geronimo. “We used to see trading programmes, collecting those devices that would be refurbished and sold in in emerging markets - Africa, Asia - and that's not the case anymore. There's still demand in those markets, because they need cheaper devices that they cannot afford. The premium segments, if we look into markets like Nigeria, the majority of the market is below $200 so if someone wants to have a premium device, they tend to buy refurbished because it's good value for money, they can have the brands they aspire to have.”
He notes that there is now a lot more demand in developed markets, including the US and Europe, because operators and manufacturers understood that if they offered refurbished devices or trading programmes, it provided a strong incentive for consumers to upgrade earlier rather than later. Additionally, refurbished devices allow new consumers to access brands that they may not have been able to afford.
“People are learning that a refurbished device is not a device with a potential risk of breaking later on or stopping working - it’s a device that comes with a warranty, because that's mandatory at least in the European Union, and it’s good value for money because it provides the specs they need.”
At the lower price point, the price gap can be as much as 50% depending on the age of the refurbished model. This trend is happening across multiple industries, but when consumers buy electronics that have been refurbished through proper channels, they know they have been tested and certified. Consumers in regions like Europe and the US are now seeing that value, and supply for refurbished devices is not keeping up with demand. “It’s driven by consumers making their first choice as refurbished device, and not just a second choice or third choice if they could not afford a device, as it was in the past. Now, they are considering a refurbished before buying a new one.” Geronimo notes that Samsung is now guaranteeing at least 50% of the residual value of any device when users upgrade to another Samsung device – these kinds of programmes will significantly expand the product lifecycle.
Until around 2018, the smartphone market was growing steadily as penetration rates were low, but when these hit 90%, manufacturers realised they would sell fewer units and needed to increase the average selling price (ASP). This required premium specs – but it was only a few years before devices were essentially so good there was no need to upgrade. Memory, storage, display, processors were all up to standard, with the significant changes delivered via software updates. Consumers now hold on to devices for longer – easily five years – and within the European Union it’s now mandatory for devices to be repairable. Previously, it was typically cheaper to upgrade than repair a broken device – but when people spend a significant amount of money on a device, they consider it an investment, and devices purchased three or four years ago can still cope with requirements today. However, Geronimo considers AI as the next big trend that will drive physical device upgrades – it is likely to be a significant enough change that vendors such as Google and Apple will drop support for older devices after five years or so.
“What we see in terms of the total journey is everyone focusing on extending the lifespan of the device, to be refurbished, to be repaired, so device will be able to have a second or even third life in most cases, especially on premium devices”, says Geronimo. There are companies that specialise in recovering materials from devices at the end of their lifespan and then recycling them, but Geronimo notes that only around 22% of all consumer electronics – not just phones –are currently recycled. However, he notes that there are high-profile initiatives underway, giving the example of Samsung, which now recovers the majority of the cobalt required for device batteries from older devices.
IDC tracks statistics for trading refurbished devices via official channels – i.e. discounting peer-to-peer transactions, such as selling an old device on eBay. Globally in 2024, the refurbished smartphone market was worth US$75 billion, equating to 208 million refurbished devices being sold. Geronimo estimates that this market will increase to US$81 billion this year, around 5% growth in units sold. This growth trend is expected to continue across the next five years – but interestingly, value will increase at a higher rate (around 7%) as people buy more premium devices. The refurbished market is growing faster than average sales of new phones, although Geronimo acknowledges that this is primarily in more developed markets such as the US and Europe – informal peer to peer transactions are far more common in a lot of emerging markets.
Geronimo observes that brands are doing a better job of educating consumers about refurbished devices – the stigma of second-hand devices being perceived as inferior is starting to dissipate. Legislation around warranties is helping to boost consumer confidence, and he notes that campaigns are now highlighting the value of buying refurbished. “The margin [operators] make on the device is not that high - where they make the money is in the airtime and data, so it doesn't really matter how they get the customers in their shops, either through a refurbished device or through a new phone.” He notes that operators are expanding their install base by promoting refurbished devices, as it helps them retain customers who might buy their initial device then trade it in a few years later. In particular, the install base for high-end brands can only increase this way: “[Apple] will never launch a low-end iPhone, so the only way to expand installed base is by selling refurbished, selling the version minus one, two or three at a lower price point, because those users may not be able to spend $1,000 on a on an iPhone, but they may be able to spend $300-400 and then subscribe to services, which is what is driving Apple's business at the moment.”
Indeed, cost is a key factor shifting consumer attitudes – as device prices escalate and cost of living crises bite around the world, saving money on refurbished devices is increasingly viewed as a pragmatic way of ‘beating the system’ rather than sacrificing buying new for the good of the environment. Geronimo is frank about this: “let's be clear, people do it not because they are concerned about the environment and the e-waste – it’s because it's good value for money. With the operators and brands bragging about how good they are with their environmental targets…at the end of the day, it's a business, and the reason is to increase the business, not because they're going to save the planet, even if they say it in the marketing messages and presentations.”
