Multiple SIMs weigh heavy on operators

The telecom industry is on cloud nine over the monthly 10-million subscriber addition, but mobile operators are not celebrating. Reason: usage of dual SIM-card phones, a recent phenomenon, is porting away revenues, with even loyal customers trying out competing operators’ rates.

For example, Idea Cellular posted a 0.7 per cent decline in the average minutes of use per subscriber in the first quarter of the current financial year, partly due to the increasing use of multiple SIM cards. So, too, with Vodafone-Essar. The company admits a fall in usage per subscriber, as an increasing number utilised SIMs of more than one operator, particularly in the new circles.

Idea Cellular Managing Director Sanjeev Aga said, “We have been seeing a rise in duplication, in some cases triplication, of SIM ownership by the same subscriber. This had been happening on different handsets, but now it’s moving over to single handsets. This could be the likely reason for a fall in the minutes of usage per subscriber and average revenues per user (ARPUs).”

Usage of multiple SIM was also inflating the total mobile subscriber base, as operators provide numbers based on activation and deactivation of connections, he said.

The proposed auction of 3G spectrum and the entry of new telecom service providers is likely to increase the number of multiple SIM cardholders. This means the revenue erosion could be higher for the existing telecom service providers in the coming quarters.

Meridian Mobile Chief Executive Officer Prem Kumar said a change in lifestyle, with subscribers keeping one number for professional and another for personal use, is one of the reasons for the growth in multiple SIM ownerships. The advancement in technology has helped in lowering the costs of handsets, especially that of dual SIM phones, and that’s a reason for the increased adoption of handsets, Kumar said.

For example, Fly’s lowest dual SIM phone costs around Rs 1,900 (the highest is around Rs 8,000), more or less in the same range as that of an average handset. Almost all the handset-makers have rolled out a dual SIM handset, which either support two GSM cards, or a GSM and a CDMA network.

One of the major reasons for the multiple card boom is the cost of the SIM itself. Most service providers sell a SIM for around Rs 100. “This is as good as giving it free,” Kumar said. For the operators, these would mean a fall in their market share (calculated on basis of revenues), while for the industry, there would be an aggregate increase in ARPUs and minutes of usage.

From a telecom operator’s point of view, usage of multiple SIM cards is a much bigger issue, as they equate this with churn (a user discarding one operator for another). “This is actually a user going in for a competing network,” Girish Trivedi, Deputy Director (ICT), Frost & Sullivan (South Asia and Middle East) said.

“For a user, the idea behind multiple SIM cards is to bring down costs. With new telecom service providers rolling out an array of schemes, including free minutes of usage, tariffs would be cheaper for a user than his existing plan.The subscribers would be keen to try out these schemes, but without immediately moving over to the new operator. This would mean the primary operator is losing out on minutes of usage, as well as revenues,” said Trivedi.