MultiSIM usage in telecom – Threats and challenges for mobile operators

Multi-SIM handsets were expected to become a 100 million volume market by the end of 2010, driven primarily by low-income, price-sensitive markets, according to Pyramid Research that also point out that market factors indicate stronger growth for this type of handsets. There are different reasons for users to have more than one SIM increasing total multi-SIM ownership. The key driver of multi-SIM ownership, namely cost reduction, is explored before the developments on the vendor side are discussed, in particular at how the low-cost vendors have managed to dominate the multi-SIM segment.

Multi-SIM handset adoption is increasing and has reached a size large enough to attract global brands. The niche was developed by low-cost Chinese and Indian vendors, which still dominate the market; now, more than 1.2 billion users have more than one SIM, with the majority are in emerging markets, driven by cost-reduction opportunities. Multi-SIM handset shipment volumes have increased rapidly and are expected to become a 100 million volume market in 2010.

Low-income, price-sensitive markets that are competitive and predominantly prepaid tend to result in pricing strategies that foster multi-SIM ownership. The pricing strategies of operators trying to increase market share result in opportunities for price-sensitive users to optimize their costs by using different networks.

In our opinion, multiple SIM ownership is driven by three groups of factors: a)Supply: usually aggresive SIM placement by operators, b)Demand: usually deal-seeking behavior and c)Environment: mobile market specifics, e.g. sim-lock, price of handsets, etc.

The multiple SIM phenomenon leads to a situation where the “share of lines” metric is not that meaningful any more. Share of revenues reflects better the fact that operators compete for each minute of traffic in almost real-time – from that perspective the objective of operators is to maximize the share of revenues.In a market with multi SIM usage, usually the downside is borne by the market leaders. The new entrants and second-tier operators stand to gain: even if they grab a small share of subscriber’s minutes it will be incremental for them.

Multiple SIM usage can be addressed by two types of strategies (simultaneous or staged) depending on the market conditions: If there is clearly identifiable multi-SIM user group, with sufficient size, a share-max campaign should be launched with the objective of maximizing share of revenues. On the contrary, if there is not a strong case for a specific action, a preemptive strategy should be pursued where on-net advantage and operational excellence should be the key actions.

Case you are interested in getting additional detail, please find next mmC Group’s point of view on MultiSIM management in telecom detailing the multi-SIM handset segment, why it is important, and how should operators manage it.

Enjoy the reading, CVA