How do they make money?
Once your phone has reached the end of its life with you, its fair to say its going to be pretty well used, damaged and worn. You might think that it has no re-sale value and is essentially worthless but its not. There are actually lots of people who want to buy and use you old mobile phone - they're just not in your country.
Mobile phone use in emerging markets such as India, Africa and parts of South-east Asia has sky-rocketed in recent years, creating a high demand for your old and unwanted phone. The average consumer there is unable to afford a brand new device however are keen to follow western trends, making them more than happy to buy what you might consider to be worthless.
This is how these businesses make money, essentially buying your old phone from you then selling it on for a profit in another country, in a market which is made accessible only for large organisations. This is because aside from actually going to India, there is not a way for you to do this on your own back.
But what about broken phones or handsets even they cant re-sell? Even these are valuable. Phones contain small quantities of metals such as platinum, gold, silver and copper and a fair amount of nickel (from the battery) - your old phone is processed by these businesses to extract these metals which can then be sold on.
So, you old phone may end up belonging to some guy in India, a piece of jewellery or even a saucepan - Making some money for you and the business along the way.
Sources:
http://www.techradar.com/news/phone-and-communications/mobile-phones/what-happens-to-phones-when-they-re-recycled-595647
http://venturebeat.com/2013/06/26/emerging-markets-are-the-key-to-unlocking-the-next-billion-users/
http://www.simplygeeky.com/wp-content/uploads/2012/11/recycle-your-mobile.jpg
http://www.fonearena.com/blog/wp-content/uploads/2009/01/india-mobile.jpg?99eae0
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