Giffgaff hungry for more as it looks to extend portfolio and review prices
Giffgaff, the mobile phone network operator, is set to broaden its offerings and review contract prices as early next year, the chief executive has revealed.
“You can expect Giffgaff to be looking to extend its portfolio as we have done this year with our Good Contracts offering,” Ash Schofield told City PM.
“We’re thinking long term as an organisation,” he said, “you know, at the moment we sell airtime [credit], we sell phones, we sell refurbished phones.
“We can’t help but think that people might want to buy other things from us as well. We’re just dying to explore where else we could turn out that people would really appreciate and value,” he explained.
Schofield said the expansion plans would “definitely” happen next year and said more details will follow in due course.
Giffgaff is an online mobile virtual network operator which runs on the O2 network providing communication services.
The O2-owned company, which has not hiked rates in three years, is currently re-evaluating contract prices for next year, according to Schofield, who refused to rule out a price hike.
He said: “We’re just reviewing things for next year…The difficulty for the market is that the market isn’t growing. There’s been about 82 million subscriptions in the market for some time now.
“Everyone’s got about 1.2 connections, but Giffgaff is a growth business,” he explained.
From 2021 to date, Giffgaff has increased customer numbers by almost 13 per cent to over four million customers.
But last year it lost around £600,000 because it helped customers trade down to cheaper contracts. “That’s fine with us. If they are still happy then we’re happy,” said a breezy Schofield.
It could explain why Giffgaff needs to expand their business to source revenue from elsewhere.
“Giffgaff like all of the other telcos is operating in a very competitive market; it is really challenging out there,” said Kester Mann, director of consumer and connectivity at CCS Insight.
“Prices are very low when they offer some of the lowest in the industry so I can understand why they may think, ‘how much return and how much margin is there in the connectivity business?’ Therefore, perhaps they do need to look at some new revenue streams to offset that,” he added.
Speculating on what form the future portfolio extension could take, he suggested there is “an option perhaps to try and partner with a player in the insurance business and cross sell that to their customer base.”
“Another one will be broadband. They’ve established themselves and have good credibility in terms of mobile but they could maybe look to extend that through similar concepts on the broadband side, through a partnership with Virgin Media, for example,” Mann explained.
Other options for the company renowned for its consumer products and value-for-money could include moving into the small business market or some kind of content, such as a partnership with a streaming provider.
James Barford, head of telecoms research at Enders Analysis, also reckons Giffgaff may be going down the broadband avenue.
“For Giffgaff, the highest priority is probably to launch a broadband product to support the fixed network economics of its parent company VMO2,” he said.
“There has been a renewed push into ‘services beyond connectivity’ recently across a number of European telcos, although there have been many efforts at this over the years, and some of these are in reverse, such as Orange withdrawing from banking, and BT partially exiting from sports rights,” Barford explained.
It comes as telcos are elbowing their way to the top of the market, trying to claw back a waning customer base that is suffering from the cost of living crunch.
Last week, BT announced its mobile division EE is diversifying its offerings by introducing household electronic goods, such as smart fridges and coffee machines, as soon as next year in an effort to accelerate customer growth.
“Consumer behavioural patterns have changed, and it is about time telcos evolve,” said Paolo Pescatore, founder of PP Foresight.
They need to be “more flexible and agile in a radically converged and cut-throat marketplace. This will force them to accelerate their own efforts, platforms, mindset, and strategic vision.”