Multiple SIM Ownership in Emerging Markets:

Drivers and Best Strategy

Presentation at the 4th Mobile Pricing Symposium

22 July 2009
Cambridge, UK

For further information please contact:

Carlos Valdecantos (+34 696 940 221, cva@group-mmc.com)

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Agenda

What drives multiple SIM ownership?

•  Operator factors
•  Ecosystem factors
•  Market factors
•  Society factors

How to address multiple SIM ownership?

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The typical modes of multi-SIM usage fall into four cases, the choice of which
depends on preferences, perceived cost of inconvenience and lifestyle.
MULTIPLE SIM OWNERSHIP > TYPICAL MODES OF USAGE
NOT EXHAUSTIVE

Typical modes of
multi-SIM usage

Several Handsets Rotating the SIMs Multi-SIM Handset Second Device

Car Fashion Net

phone phone book

1. Does not require to switch
cards manually.
2. Subscriber can keep SIM-
locked phones – one for each
operator.
3. Practical limit is 2 – rarely do
people walk around with 3
handsets.
1. Convenience of only carrying
around only one handset.
2. Cannot receive urgent/
emergency calls on SIMs
outside handset.
3. Handset must be unlocked.
4. Messy card-swapping
procedure.
1. Convenience of carrying only
one handset
2. Cards are always on (with
limitations)
3. Handset usually more
expensive and not that easy
to find (not enough variety).
1. In some cases it is very difficult to remove the
SIM card.
2. Some devides as netbooks use predominantly
the data connection.
3. While the SIM is inserted in a netbook, it
cannot receive mobile calls, so using the
primary SIM may mean missed calls.

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The existence of the multiple SIM phenomenon is driven by four groups of
factors related with the operator, the market, the ecosystem and the society.
MULTIPLE SIM OWNERSHIP > MAIN DRIVERS

Specific actions of the The mobile industry’s

operator such as promotions ecosystem – mainly
and pricing differences drive Operator Ecosystem handsets and niche devices,
multiple SIM usage. affect multiple sim usage.

Multiple
SIM
Usage

The mobile market Social composition, norms,

composition (prepaid vs. rhythm of life and cultural
Post-paid), value brackets,
Market Society specifics do affect the
regulation, etc. multple SIM phenomenon.

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The pricing decisions of mobile operators are probably the main driver behind
multiple SIM ownerhip.
MULTIPLE SIM OWNERSHIP > OPERATOR-RELATED DRIVERS

Large difference •  Large differences between on-net and off-net tariffs stimulates arbitrage
between tariffs behavior – one SIM for each operator. The on / off-net difference may be
on-net / off-net manifested through headline price or generous on-net bundles.

Attractive sign-up •  During aggressive acquisition campaigns operators will include many
minutes bundle on-net minutes as an initial sign-up bonus. Activating this new card then
(w/o commitment) becomes attractive even only to use the initial bundle minutes.

Operator- Attractive •  Frequent promotions where large bundles can be accumulated make
people keep active SIMs from different operatos and get the best of both
related promotions with
worlds - the so called “hamster effect”.
bonus minutes
drivers
•  Also known as “SIM flooding”, aggresive SIM placements occur where
Aggressive SIM an operator wants to be used by a subscriber at any cost, even if that
Placements means giving the SIM away as a present.

•  When an operator brand is perceived as prestigious and attractive, a

Strenght of subscriber will not give up their old SIM even if they activate a SIM of the
operator brand competition.

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The players in the mobile market ecosystem contribute towards multiple SIM
usage directly or indirectly.
MULTIPLE SIM OWNERSHIP > ECOSYSTEM-RELATED DRIVERS

•  The low cost of handsets permits subscribers keep 2 or more SIM cards
Low-cost of simultaneously active without having to switch. This drives multple SIM
handsets usage in cases where the user would normally avoid SIM swapping.

Availability of •  The possibility to acquire unlocked handsets (because they are available
unlocked on the market or because they can be unlocked) permits rotating SIM
handsets cards from different operators on the same handset.

Mobile Availability of •  The availability of multi-SIM handsets makes it extremely easy to

maintain 2 or more SIMs active without the associated inconvenience of
Ecosystem multiple SIM
swapping SIMs or carrying many handsets around.
handsets
drivers
•  Fashion phones, car-phones, SIM-slot net-books, blackberries or some
Availability of consumer M2M devices (such as Amazon Kindle or personal medical
niche devices telemetry) practically require that the same person uses 2 or more SIMs.

•  Distributors will activate SIM cards in order to meet sales targets. The
Existence of channel gains from the commission and practically gives away the
Channel Fraud activatedSIM cards below value. Thus people carry around many SIMs.

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A combination of certain market characteristics can be favorable for the
appearance and development of multiple SIM ownership.
MULTIPLE SIM OWNERSHIP > MARKET-RELATED DRIVERS

Predominantly •  Postpaid plans will typically not create motivation for arbitrage. In
prepaid mobile addition maintaining multple post-paid contracts with varous operators
market is expensive. Largely prepaid markets are fertile soil for multi SIM.

•  Low GDP/cap markets with price sensitive consumers will look for ways
Price sensitive to optimize their telecom spending and therefore be more prone to
market arbitrage.

Mobile Little or no •  In markets with no standardized churn accounting (via regulation or

industry agreement), operators may have long validity periods of SIMs
market regulation of
which enables users to keep several SIMs even without active usage.
churn accounting
drivers
•  In markets where there is a large gap of market share between the leader
Large market the followers, the followers will typically have aggressive acquisition
share disbalance behaviour, which (even temporarily) drives muliple SIM usage.

•  In makets with poor network coverage, people on the move will maintain
Quality of mobile two or more cards to ensure they will always be in range (especially for
network coverage travel in non –urban areas).

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Among the society-related drivers of mulptle SIM usage there is a number of
non-rational factors such as image and relationships.
MULTIPLE SIM OWNERSHIP > SOCIETY-RELATED DRIVERS

Importance of •  In some markets the mobile number is part of “the personal brand”; yet
own number + in others not at all so - there is no problem carrying various SIMs and
existence of MNP having several numbers.

Importance of •  In some countries the mobile prefixes associated with early adoption of
prefix mobile telephony is a symbol of prestige, so people will not give up their
original number even after activating another SIM.

•  Some people will keep 2 numbers: a personal one (which will never
Personal change like a Yahoo account) and a second job-related one.
•  Some people will activate a SIM card just temporarily to put up an ad in
Society- privacy
the newspaper that they are selling sell their car and not give their
related “usual personal” number.
drivers •  People with a lot of time on their hands (unemployed or part-time jobs),
Value of time and
will have no problem carrying around and swapping SIM cards. In fact
rhythm of life
for an unemployed person cost saving is important.

•  When the employer pays the mobile bill, personal calls usually have to
Employer pays
go on another SIM card. Despite various operator supported solutions
the mobile bill
(e.g. dual number singleSIM) multiple SIMs remains a polular choice.

Social circles & •  In some countries you communicate different number to members of
relationships your different social circles. Leaving this group (or person) is easy: just
throw the SIM.

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Agenda

What drives multiple SIM ownership?

How to address multiple SIM ownership?

•  For whom is it a problem?
•  Important facts to keep in mind
•  What is the right strategy towards multiple SIM ownership?

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Fact 1: Market share of SIMs has lost its traditional meaning. What matters
today is share of telecom spend. The share battle is in the pocket.
MULTIPLE SIM OWNERSHIP > CHANGE IN PARADIGM

Before Today Relevant Focus

Operator C Reve
Multi-SIM-ers Operator C
nues
Operator A

MoU

Subs
Operator B
Operator B Operator A

Lines

Zero sum: Typically subscribers Multi SIM: It is a fact of life for Paradigm shift: Usually “market
were considered as belonging to mobile operators. The amount of share” means share of SIMs – a
one operator only and in order to multi SIM usage depends on con-cept losing its relevance,
change operator they churned, i.e. various factors and is different in because 2 lines belong to one
left the first one. Multi-SIM usage different markets. Multi SIM in itself subscriber who balances the usage.
was not even considered or was is not a cause for concern - the The really rele-vant metric is share
regarded as a rare phenomenon. question is: what’s behind it? of revenues and in some cases
share of traffic / MoU.

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Fact 2: Multi SIM both creates and erodes value for all players; Fact 3: The
market leaders risk more revenue erosion.
MULTIPLE SIM OWNERSHIP > WINNERS AND LOSERS

Fact 2: Multiple SIM also creates value Fact 3: Market leaders stand to lose

Value Value Total Single SIM MultipleSIM

eroded created impact Scenario Scenario

If subscribers were forced to use only If subscribers have 2 SIMs they will
one operator they would go with their take some of their traffic to the 2nd
1st choice – overall best operator. SIM (whatever the reasons)

1st choice 1st choice

operator operator Part of traffic
migrated to
secondary
network.
2nd favorite
or niche
Value is eroded by Value is created The net impact is the
multi-SIM usage whenever a subscriber combination of both operator
whenever there is a has a chance to use effects and depends
deal-seeking the mobile phone on the proportion of
behavior. From origi- where he/she normally each group of factors.
nation perspective would not: The leaders – those players who have a better overall offer,
value is eroded from •  while driving
foregone subscriber •  while in the disco
who have a strong brand and generally dominate the market
revenues. From •  while in zone stand to lose. New entrants, niche players or second-tier
termination – loss of without coverage
interconnection with their usual
players will chip-away parts of traffic by being present in
revenues. operator. subscriber’s pocket through a 2nd SIM.

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Strategy towards multiple SIM ownership depends on player’s market position
and the presence of the phenomenon on the market.
MULTIPLE SIM OWNERSHIP > STRATEGY TOWARDS MULTIPLE-SIM OWNERSHIP

How to address
multiple SIM
Early Stages / Very
ownership? Non-existent
Level of Multi-SIM Ownership
present

Leader
Preemptive Strategy Share Win-back
Build loyalty through operational Focused BTL campaigns in order
excellence and retention initiatives. to win back share of revenues from
Preempt the need for 2nd SIM. muli-SIM subscribers.
Player’s
Market
position

Attack: Aggressive Revenue Share Maximization

New entrants and followers see an incremental financial impact, even if they only
Follower win a small share of pocket of the mobile consumer. Until a balanced revenue
share is achieved, their best strategy is to attack.

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Makert leaders should realize that not all multi-SIM-ers are the same: different
approaches must be applied based on subscriber profile.
MULTIPLE SIM OWNERSHIP > SUB-SEGMENTATION OF SUBSCRIBER BASE

Tactical map for a dominant player in a market with certain level of multiple SIM ownership.

Share-max strategy Preemptive strategy

1.  Become 1st 1.  Incrase loyalty

Subsriber value (MoU) choice 2.  Cross / up-sell
•  High-value: it is important •  For intensive users, the
to increase share of wallet probability is that we will
as much as possible. not be able to win a lot
(Taking into account all more in terms of share.
practical limitations). Cross and up-selling are
good possibilities, but
•  For low users where we
are not the 1st choice, retention actions are a
1.  Become 1st 1.  Stimulate must.
effort whould be choice (now) ARPU
prioritized AFTER the 2.  Stimulate •  For low users, ARPU
other three quadrants ARPU (later) stimulation action should
have been addressed. be applied.

Share of wallet (%)

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There is no unequivocal way to identify multi-SIM users, therefore a combined
approach of identification and self-selection must be used.
MULTIPLE SIM OWNERSHIP > DETECTING MULTPLE SIM USERS IN OWN BASE

Profile
1
Profile
2
1.  The total telecom Usage Scoring
Profile
usage of one data Algorithm
3
person is split No
between 2 or more Scoring clear
profile
different MSISDNs
MSISDN 1 (same or different Each profile can be identified with different degree
operators). of certainty (a cut-off point during cam-paingn
design and implementation), thus the boundaries
between profiles will be soft. There will be a “no
2.  The analsysis of profile” category too.
each individual Combined
MSISDN usage will approach
MSISDN 2
only give a partial %
discount
picture and will look
like 3 subscribes
each with different
behavior.
MSISDN 3
Scaled MoU off-net
3.  There is no reliable
benefits
Total mobile way to identifiy a “Scale”: the benefit (e.g. off-net discount) is given
when a certain volume of minutes is reached. A
usage of one multi-SIM user. multi-sim user (who has the minutes and CAN
bring them over) will be able to benefit. A low-
person usage subscriber won’t unless he/she incrases
usage (desirable). This separation ensures no
cannibalization especially when identification
algorithm allows a degree of probability.

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The methodology has two main outputs: a customized multi-SIM detection
system for periodic reports, as well as first recommended action on multi-SIM.
MULTIPLE SIM OWNERSHIP > CREATING THE TOOLS TO COMPETE SUCCESSFULLY IN A MULTIPLE-SIM MARKET

DESIGN IMPLEMENTATION

Data-driven Survey-based Implementation Run first diagn.

A profiling and B validation and C of regular D report and action
segmentation refinement methodology recommendation

Define data Define anti- Implement Develop

Run 2nd Design
extration cipated MS script on delivery Run first diagnostic
probe survery
query profiles choisen system + report
platrom interface

Extract
usage data

Main Activities
Implement call-out
Run 1st probe
campaign

Adjust input vars, Validate input vars, Based on output

Integrate with IT
threshold levels threshold levels recommend on
systems and
and processing and processing specific course of
processes
algorithm. algorithm. action.

WIP: FIN: FIN:

WIP:
Customized Validated Automatic
Objectives & First diagnostic
detection customized algorithm for
Deliverables report and
algorithm (not detection periodic
recommendation
validated) algorithm diagnostic

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Multiple SIM ownership is the child of the aggressive competition in mobile
telecoms. Operators must adapt to the new rules and maximize revenue share.
MULTIPLE SIM OWNERSHIP > CONCLUSIONS

1.  Strong operator competition fuels the gradual appearance of multiple SIM ownership.
2.  Specifically four groups of factors drive the multiple SIM ownership:
a)  The operator – pricing decisions and aggressive promotions
b)  The mobile ecosystem – complementary devices and trends
c)  The mobile market – market structure, price sensitivity, etc.
d)  The society – cultural and non-rational factors
3.  No one single player can affect materially the extent of multi-SIM ownership.
4.  The impact of the mulpleSIM phenomenon is not one-directional, however it will
typically erode and redistribute revenues from dominant players towards
followers and new entrants.
5.  Strategy towards multiple SIM ownership:
a)  Effort must be focused on share of revenues and not share of SIMs.
b)  Dominant players should try to neutralize it by revenue protection actions –
loyalty improvement (preemptive) and BTL revenue share maximization (reactive).
c)  New entrants & followers: attack and take advantage of multiple SIM
phenomenon.

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 Carlos Valdecantos
Email: cva@group-mmc.com

mmC Group Strategy Consultants

Joaquin Turina 2, 1st floor
28224 Pozuelo de Alarcón, Madrid
Spain

Phone: +34 91 129 8100

Fax: +34 91 714 1888
Web: www.group-mmc.com
Blog: consultantvalueadded.com

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