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The prevalence of multiple-SIM use remains one of the most critical issues for mobile operators in emerging markets. It is driven broadly by consumer choice and potential manipulation by retail partners, and brings with it the double difficulties of stagnating voice revenue and eroding subscriber valuation. Consumers use and throw away their SIM cards when the promotional offer is closed or the discounted usage is exhausted, and so become chronic churners. Retail partners also sometimes resort to selling a SIM card to a consumer asking for a recharge voucher, thereby benefiting from the much higher commission on the sale of a SIM. In some cases, the sales force also activates unsold SIMs through dubious means. Together, these factors can generate apparent monthly churn levels as high as 25%, requiring a significant number of gross subscriber additions just to remain positive. These behaviours create a negative cycle of impact for new operators.
The negative impact of multiple-SIM use on a new operator’s business [Source: Analysys Mason, 2012]
1. Open card is when a retailer reports a fictitious subscriber by making fraudulent calls.
2. SIM recharge substitution is when a retailer sells a new SIM card to a customer when he asks for a recharge.
Traditional reactions can fall shortTo counter this, operators, especially new entrants, have tended to focus their efforts on persuading consumers to replace their primary SIM by employing aggressive price discounting. This includes price discounting based on time of the day (peak vs. off-peak pricing), week of the day (weekend vs. weekdays, and even days before pay day), base station load, customer location (home-zones), user groups (closed user group plans), bundles (service or device) among other variants. However, with network coverage and quality being uppermost considerations for the primary SIM user, such a pricing approach does not work until new entrants are able to establish a reasonable level of coverage.
Winning strategies
One successful approach in a multiple-SIM market is to deliver compelling value, with opportunistic monetization of secondary SIMs through non-discounted tariffs and incoming calls. This can help ensure that the secondary SIM customer remains active as long as possible. Such incentive models vary and need to be carefully customised to allow monetization, and rapid conversion from secondary to primary SIM.
In a multiple-SIM market, about 50% of users will churn after 30 days on the network, while the next 30% or so will churn during the next 15 to 30 days. The 10 to 20% remaining after 60 days could be converted to a primary SIM user; these users are prime candidates for loyalty and retention initiatives. For the lost 80%, an opportunistic monetization approach using secondary SIMs can help regain subscribers and therefore increase revenue.
A monetization approach in a multiple-SIM market context (illustrative) [Source: Analysys Mason, 2012]
The key to successfully monetising a secondary SIM is to keep the user on the network for as long as possible, and find opportunities to drive usage through restricted-period benefits. Initiatives for keeping the SIM active generally require a loss leader or incentive to drive initial acquisition. Such incentives can be classified into the following three models, based on the level of commitment and nature of incentives:
–Purchased incentives: Benefits valid over a period – for example, free on-net calling for 5000 minutes.
–Expected incentives: Benefits which are valid over a period – for example, eligibility to participate in a lucky draw if the SIM is active on an hourly or daily basis.
–Passive incentives: Benefits that do not require active participation from the user – for example, earning bonus credits on incoming calls, which can be used as free airtime.
The key to winning in such a market context lies in the service provider’s ability to identify rotational churn customers (as well as potential primary SIMs), and to develop compelling value propositions for keeping these users active and monetising them over time. Developing a compelling proposition will require a detailed understanding of the market context, and possibly investment in infrastructure, such as real-time charging platforms. New entrants adopting these models have been able to achieve market-leading net additions, as well as reduce their share of secondary SIMs by 10% over a relatively short period.
Pankaj Agrawal is a Senior Manager/Associate Director with Analysys Mason’s India office and has significant advisory, executive and operations experience in the telecom industry and an extensive understanding of wireless and wireline investments, technology, customer and market issues. At Analysys Mason, he leads engagements in the areas of transaction advisory for major funds, as well as strategic planning for telecom vendors and operators in India and other emerging markets.
Before joining Analysys Mason, Agrawal was part of the telecoms corporate and competitive strategy team for a consulting organization working with leading telecom operators in the United States in the areas of spectrum valuation and corporate planning. He also brings an operational understanding of issues in the telecom industry with prior roles as national head of revenue planning and pricing management for the mobile business of India’s largest private operator. In this role he had significant exposure to corporate planning and strategy formulation, network investments, operating plans, tender offerings, tariffs and new product introduction. Agrawal has an MBA from Indian Institute of Management Ahmedabad, and a Bachelors of Engineering in Electronics and Communication.
