Several retailers are in discussions with dealers to set up franchising schemes in what could be a serious blow to airtime distributors.
Plans for a franchise model are being pursued by at least three medium-sized retailers. All three are looking to increase the scale of their operations without risking the large costs associated with opening more stores.
Meanwhile, dealers are trying to survive after a brutal 2007 in the dealer market, with many asking questions about the value of their airtime distributors.
One dealer who has been approached said: ‘If we partner with someone big, we can benefit from better commissions, better availability of stock and the ability to sell Sim-free stock. And it gives us a more recognised brand on the shop front.’
Retailers involved are looking at opening between 10 and 20 of the best performing dealers by the end of the year. For distributors, losing several high-quality dealers could prove devastating in some cases.
T-Mobile and Orange are known to be considering the repercussions of an increase in their acquisition costs through such deals, as they have to start paying premium price commissions to more dealers.
One senior retail source countered: ‘The networks are sick of churn, so if they can tie up a retailer with smaller franchisees who are more closely aligned, and can give them new customers but also base their models around retention, it is potentially very attractive for them.’
Predictions of huge casualties from the small independent dealers and distributor sector were borne out to a small extent in 2007, but an even harsher climate is predicted for this year.
‘People will be joining forces much more now. It will be the only way to survive,’ said one senior source.