Billionaire Sir Richard Branson would like to break into the Canadian financial services industry one day, promising to shake it up just as he did the cellphone market.
Such a vow, however, isn't always easy to fulfill. His company, Virgin Mobile Canada, yesterday announced it will launch cellphone plans with contracts starting next year, joining - instead of rebelling against - the big wireless guys.
It's a whiplash-inducing strategy shift considering that the upstart made its name by railing against the pitfalls of long-term cellphone contracts, including comparing them to a fictional sexually transmitted disease called "the Catch." When Virgin Mobile launched in March, 2005, it positioned itself as the great liberator that shunned contracts.
Now Sir Richard says it is time for change. He announced the contracts at a subdued appearance in Toronto, where he wore jeans and a shirt instead of his usual costume and acted as an assistant to magician Criss Angel rather than performing a stunt himself as he frequently does on such occasions.
"Basically, we had to decide whether to limit ourselves to 22 per cent of the market or go for 100 per cent of the market," Sir Richard said yesterday in an interview, explaining that three quarters of Canadian subscribers are on contracts.
He seems pleased with the inroads he has made to date in Canada, signing up some 500,000 wireless customers and on track to reach his 600,000 goal by the end of the year. This March, Virgin Mobile reached the $100-million mark for revenue.
(Virgin Mobile is an equally owned venture between Bell Canada and Mr. Branson's Virgin Group PLC.)
He wouldn't give any details on what Virgin Mobile's contracts will look like, including whether they will include fees for early cancellation or the controversial system access fees tacked on to bills by the other carriers.
"A lot of contracts were evil and still are evil," Sir Richard said.
"Ours won't be."
Some observers believe it won't be easy for Virgin Mobile as it moves into wireless contracts, known as the postpaid market. It is a more lucrative segment, but it is also where the big three cellphones carriers are focused.
"It's a code the others have cracked a lot better," said Standard & Poor's analyst Madhav Hari.
Sir Richard also said his company would shake up the financial services industry just as it has shaken up the wireless market.
In Britain, Virgin Group offers credit cards, loans, mortgages, insurance and deposit accounts.
In the United States, the company says it helps structure loans between family members or friends.
In Canada, Virgin Group would need to hook up with an existing financial player here, such as credit unions, to give its customers access to cash machines, said Gavin Graham, chief investment officer for Guardian Group of Funds.
Although Sir Richard didn't give any details about what kind of financial services the company could offer, he believes there is room for change in this area.
"We'll look at the areas where we can make the same sort of difference we've made with mobile phones in other areas," Sir Richard said.
"Financial services must be one, where I think we can make a major difference."