Wednesday, February 14, 2007
Tick Tick! Credit Timebomb?
Maybe it's the media mentions, but debt is becoming an issue for everyone again. John Kennedy over at Silicon Republic brings our attention to a recent report by Intrum Justitia, which handles over 95% of all the Telecommunication companies debts in Ireland, that : Consumer debt levels in the telecoms sector in Ireland are the fastest growing of any industry sector over the past 10 years. And we are not talking small change, the average outstanding debt is reported at 300 euro. For smaller entrants into the telecoms market, the ability to finance this outstanding consumer debt could even be considered a barrier to entry. Perhaps we will see more start up's adopt pre-paid models to overcome this financing requirement? Pat Phelan reports that Vodafone are now enabling miropayments (and potentially perhaps even making their "text credits") convertible to cash through a deal with CityGroup. So the question might become, "Are Telecommunications Companies poised to become the next generation of credit management companies"? And perhaps the very nature of debt and debt communications is about to change. What if you could loan your friends money directly via your mobile phone? What if a group of people could give a micro-loan to another group of people? Well, with Vodafone now connecting people on social networks, and with an exchange mechanism, this now becomes possible. Watch out for Prosper and Zopa in this respect. Micro-payments and Micro-debt may also change the absolute amount of debt outstanding due to the mechanics of "systems dynamics" and "feedback loops". For instance, I am not waiting until the end of the month to get my credit card bill, or my telecoms bill. I know how much I owe every day, and demands or reminders might be due on those obligations at any time. And as if to announce that debt management is now firmly on the agenda, in the same SiliconRepublic piece Intrum report that they have just done a deal with Goldman Sachs to purchase about 200m euro in debt from other Irish business sectors this year.