Distributors at odds over phone cards

Gaming and lottery company Supreme Ventures Limited, which trades as SVL Group, wants to sell Digicel phone cards, but has not been able to strike a deal with the agent that handles the distribution of the cards to retailers.

SVL already sells phone credit for all telecoms, including Digicel Jamaica, via electronic means, referred to as PIN codes; but it wants to grow that revenue stream by onboarding its more informal network of sellers, or street-level vendors, who are not connected to SVL’s sales terminals or machines, and sees the phone cards as the answer.

The gaming and lottery company says it’s already distributing phone cards for Flow Jamaica, but “wants in” on the substantial portion of the telecoms market that Digicel represents. Digicel’s subscriber base of around two million is twice the size of Flow’s.

It’s been negotiating with Interlinc Group to bulk purchase Digicel phone cards for on-selling to vendors in its network, but an accusatory tweet last weekend from Christopher Berry, a director of the gaming company, suggests the talks are not going SVL’s way.

Berry is a principal shareholder and chairman of Mayberry Investments Limited, which holds shares in SVL. Mayberry’s CEO, Gary Peart, is also executive chairman of SVL Group.

Interlinc, a logistics and consumer electronics and communication products distributor, is a member of the Musson group of companies headed by Paul Scott, to whom Berry’s tweet was directed.

“PB Scott of Mussons Group, why would you refuse to sell phone cards to SVL Jamaica’s leading pin distributor ...,” the tweet read in part. He also tagged the Fair Trading Commission, but the competition watchdog has not been asked to weigh in, so far, nor has a complaint been filed.

Scott initially declined to comment on the imbroglio, but later re-directed enquiries to CEO of Interlinc Jason Corrigan, saying any card distribution deal would have to make sense.

“Interlinc distributes phone cards across 23 markets. It is in the business of selling airtime and ensuring that every nook and cranny is covered in the most effective way. If a proposal is made and it adds value to the distribution, then I am sure it will be taken at its merit,” Scott told the Financial Gleaner.

Xesus Johnston, vice-president of SVL Group and CEO of gaming subsidiary Prime Sports, says his company is looking for complementary products to expand the portfolio of local retailers, including its Supa Sellaz programme. So far, that’s led to a partnership with cigarette distributor Carreras, where their respective vendors sell both lottery and cigarette products at kiosks set up nationwide.

As for the discussions with Interlinc over the phone cards, the talks have been ongoing for over a year, Johnston said.

He explained that in the top-up business, the PINs and phone cards are acquired at a wholesale or discounted price, relative to the face value of the credit sold.

“Based on the volume bought, then there is a higher discount and this would mean more for us as a large distributor; so we can pass that on to our retailers so that they make a good commission,” he said.

He also noted that SVL’s entry into the phone card market could serve as a check on the gouging of customers, who are sometimes overcharged for phone cards.

A typical $100 phone card, which should retail at $125, inclusive of GCT, often retails for $150 to $180, Johnston charged.

“We’d be able – as we’ve done for the PIN code market – to bring the right price to the phone card market,” Johnston said.

SVL is Jamaica’s largest distributor of PIN codes. Through the 14-digit codes, the it upload credit to mobile phones that are on a prepaid plan. The gaming company presently distributes those codes for all telcos, using terminals that either produce a slip with the code or transfer the credit directly to a mobile device.

Interlinc CEO Corrigan, who is a former Digicel executive, told the Financial Gleaner that their present system of distributing phone cards is effective, and any new arrangements would have to be approached carefully.

“All these small businesses that we sub-distribute through, they are the businesses that we support. We don’t want to go into their channel and disrupt business for them. If we give cards to SVL, how will that work?” he asked rhetorically.

Corrigan confirmed the talks with SVL, but said they have had no discussions in the past six months. He also noted that there was no objection to SVL re-engaging in discussions about how their distribution of the cards would actually work.

Johnston also said SVL was willing to re-engage with Interlinc.

neville.graham@gleanerjm.com