Public Mobile turns to financial services for growth
By Jamie Sturgeon, Financial Post
TORONTO — Public Mobile Inc., the smallest of the country’s new wireless entrants, has begun selling financial services in a move to diversify amid an intensely competitive mobile market.
The fledging discount carrier will allow customers to pay bills to other companies, send money orders and conduct other bookkeeping duties for less money than what’s charged by larger institutions such as banks, chief executive Alek Krstajic said Tuesday.
The expansion into discount banking is intended in part to drive subscriber additions to Public’s wireless business, the executive said.
“We think what’s going to happen is that we’ll seed it with Public Mobile customers; next, we’ll start bringing in people to use Public Cash Services who may take a wireless product,” Mr. Krstajic said in an interview at a press event in Toronto.
Public Cash Services has partnered with credit-card issuer Mastercard to allow services such as bill payment and cheque cashing, while Ria Financial Services will handle overseas money transfers, a service Public hopes will entice a core segment of its targeted wireless base.
Smaller wireless operators continue to face challenges in acquiring sustainable — and profitable — customer bases. Far larger incumbents Rogers Communications Inc., BCE’s Bell Mobility and Telus Corp. remain dominant in the $18-billion industry, controlling more than 90% of the market nearly three years after new competitors first began launching services.
Public Mobile has acquired approximately 200,000 subscribers, according to the privately held company’s last disclosure more than eight months ago, which is well below market forecasts.
Competing newcomers Wind Mobile and Mobilicity have faced similar challenges reaching subscriber targets, while revenues generated per user remain unprofitable for all three entities, analysts estimate.
The small fees collected on wire transfers, bill payments and other transactions will provide an incremental boost, Mr. Krstajic said, admitting that move into financial services was not in the firm’s original launch plans.
“It’s been a gradual evolution, as we started to understand our customer base [and] observe them,” Mr. Krstajic said. “It was not contemplated from day one.
Public’s retail footprint of 37 stores in Montreal and Toronto will support the new services, while third-party dealers will be included later, as might a deeper general push into the new category.
“Will we go out and buy some cash services stores and then have Public Mobile roll into that? Sure,” Mr. Krstajic suggested.
Public, which is primarily backed by the OMERS pension fund as well as U.S. investors, is “at heart” a wireless carrier, the executive added.
He noted that financial services are converging with mobile technologies at an accelerating pace and a move into the space could open up new avenues for growth down the road.