Double simmers in your operation? Welcome on board.

As you may know we are currently working for 4 different operations across Africa. All of them are showing similarities in terms of customer penetration and usage, and it was funny to see how other big telecom groups such as Orascom are facing the same issues (see Arabian Business’ essay: Orascom subscribers pass 77mn mark).

According to the publication, the mobile phone operator Orascom Telecom reported a four percent decline in net income for the first half of 2008 to $276 million while report a total subscribers base exceeding 77 million, up 31 percent over June 2007.  Net, net, same us what we are seeing in some other places is Africa and Middle East: more clients, less revenues.

Remember my previous post regarding ARPU erosion and growth? As written before, ARPU decrease does not mean growth decrease. This trend is attributable to maturation of the market as new users generally enjoy lower levels of disposable income and use of double SIM cards is expected to continue to grow. Double-simmers, that is the question.

In price sensitive countries, price per minute (or second) is key and, instead of what we are seeing in mature markets in Western Europe, people are pretty used to switch his two (or more) SIM cards within the same handset at the right moment to get the best tariff available.

One of our clients along with its rivals, saw ARPU decline in the country during this year while the average population of clients sharing more than 2 SIM cards increased up to 25% of the total mobile penetration of the country. Relevant insights to be considered were:
1.    SIM sharing with the incumbent was the choice selected by the most valuable clients, less interested in price per minute but highly interested in value added campaigns such as “incoming bonus: the more they call you, the higher credit you have to call”.
2.    SIM sharing with the third entrant was relevant in terms of number of subscribers, but minor in terms of revenue. Low value & price driven clients did not understand the price-per-second advantage of our client and therefore we not using our SIM card as they have the perception that the challenger is the cheapest.

This two segments required different measures to drive traffic through our network. For the first group, we supported the operator in the definition of a “incoming bonus” campaign, promoting aggressively incoming traffic to ensure the user was maximizing the SIM time in the handset with the aim of getting airtime for free. The second group required a communication campaign, as the economics unveil a clear advantage for our client for customers with less than 60 seconds of average call length and more than 50% of on-net traffic (basically, 80% of the total market in the country).

Our client is doing the correct thing. We, as operators in emerging markets with room for growth through acquisition, should think on how to avoid the double sim effect in our network and therefore, in our revenues. Pricing strategies, campaign management and communication efforts will be the tools to be used to reduce the “pain”. I will post a detailed essay on how are we doing this in countries such as Sudan, Argelia, Morocco or Turkey .

In the meanwhile, enjoy the reading.

Best
CVA