I normally don’t post on this forum, but thought I’d chime in a few points here, albeit from a different angle.
I am a long-term heavily invested Telus shareholder so I understand this move is meant to in theory increase overall average revenue per user (ARPU) by converting a direct discount into extra revenues two ways: 1. By sidelining cash savings to points which need to be applied by the customer, and 2. By squeezing margin from existing customers. Telus with their Optik Internet/TV and Mobile plans do something similar by periodically adjusting their prices to create greater profitability from the existing customer base, churn aside and all else equal.
I strongly feel this decision was made without considering the strategy of what Public Mobile was/is SUPPOSED to be, and this is a knee-jerk reaction from Telus management to overcome their recent performance slumps. By design, PM is positioned to be a higher volume, low cost/margin “fighter” or “flanker” brand, meaning they capture the price-conscious, self-serve types of customers that their other brands (Telus, Koodoo) cannot offer due to their strategies. For the reasons everyone here has explained in their replies, PM customers are very price sensitive. Personally, I moved to PM as I was tired of Telus/Koodo doing their price squeezes and having to deal with their loyalty teams. I do the “bring my own device” plans to maximize my flexibility.
What the previous direct discount model brought Public Mobile, frankly, is “indifference” to other options, which was a brilliant tactic. In other words, the yearly loyalty discount created a price disparity favouring PM and thus customer indifference to other competitor offerings. In many cases, when an appealing offer came up from a competitor, the yearly tabulated loyalty savings created this indifference and thus maintained the revenue streams. I felt I did not want to lose "tenure" to capture a few dollars, knowing full well I'd make it up in the long run with loyalty. This is a user base PM can count on. You may not make everyone happy, but it was an easy and working system. Plus with PM, this was an equitable mechanism for loyalty (short of having incredible negotiating skills with Telus loyalty teams).
Removing these direct discounts now exposes the existing customer (remember, these are price sensitive and generally savvy customers in BYOD situations) in a position to be more elastic and sensitive towards competitor offerings. I wonder how many new customers are required to replace the lifetime revenues of a long term churned customer lost to this change, i.e., those who would have stuck it out four or five years to maximize their discounts. These new customers will only stay as long as they can until something better comes along, and average customer tenure will plummet. Above all else, these customers are not on contracts and can navigate between providers at will.
I realize the PM/Telus folks likely have modelled or analyzed the potential impact of this change. I’m really hoping they did the full math to consider the consequential secondary fallout. I am in a unique position as an investor - I am all for more profits as my yearly Telus dividends exceed what I pay for my family’s phone plans. However, I am gravely concerned and I fear the domino effect of this change, particularly when you consider referrals and loyalty frameworks can begin to collapse and implode, and the new customer base coming in will not have incentive to put in the tenure due to the offerings. This is a fundamental mission misalignment with PM. The margin squeezing strategy can and does work for Telus and maybe Koodo to an extent but will cause some significant uproar with PM and significant, possibly irreparable, collateral damage down the line.
