Multiple SIM management: the challenge.

I recently came from south and mid Africa, where I met a couple of VPs responsibles for the African Operations of a major telecom operator with presence in ten different countries. I was asked for advisory on three specific topics; one of them was double sim Management and it’s effect on the ongoing downturn evolution of their ARPU levels.

We had an interesting and constructive session. The highlights wrapped up alter the meeting are:

  1. Double simmers represent a significant community in most of the African markets where the total penetration rate hasn’t reached a maturity level. It will be growing in the next 2 years.
  2. Most of these operations’ customers unveil a huge sensitivity to price, moving from one operator to other just for the sake of a premium discount
  3. The loyalty of these customers to the SIM is therefore inexistent, preferring these “dustbin simmers” to get another SIM and renew the promotion better than any promo designed to maintain their current number
  4. The cost of sales and acquisition of these clients is therefore high, having to control the distribution and channel mechanisms to avoid revenue loss
  5. The churn contribution of this type of clients is very high making it necessary for the operators to define expensive retention and loyalty strategies

As I am telling to the rest of my clients in the region, the double sim management exercise should consider two different levers: A) Room in the country to develop our market share and B) share of net billed traffic of our SIM base.

The key question agreed was that while the telecom markets have room for growth, the operators will maintain their priorities on acquisition better than on trying to get as much as billed traffic as possible. Profitability might not be a problem now, considering that there are ARPU stimulation and retention strategies that will help us on increasing our net share of billed traffic when necessary.

African dilemma

This might be different depending on the market. It is not the same being Orange in Uganda (5th operator in an already populated telecom market) than MTN in Sudan (2nd placer in a country with 5 net million clients to come to the market) or MTC in Namibia (2M customer market with low room for growth and just 2 players, one of them with more than a 80% of M.S.).

The trade-off between these two levers will define the best way to handle this hot topic. Most of the countries have not yet crossed the wireless subscriber penetration mark of a mid-mature country but they are all reporting unrealistic market shares primarily due to multiple SIMs reporting. It will come a time when this will change. Until then, my suggestion would be to look closely to how multiple-SIM ownership will impact the industry at both operator and regional level. This phenomenon is pushing penetration rates significantly in some African markets, but these figures inevitably include large numbers of inactive subscribers. Furthermore, increasing rates of multiple SIM use contribute to falling revenues per registered SIM card. This will be the real tough exercise to improve.

Best regards.
CVA, Flying to Madrid

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