mmc approach multiple sim blog

8/14/2019 MmC Approach Multiple SIM Blog

1/17

Page 1mmC GROUP Strategy Consultants Multiple SIM Ownership in Emerging Markets

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, [email protected])


2/17


Agenda

What drives multiple SIM ownership?

Operator factors Ecosystem factors Market factors Society factors

How to address multiple SIM ownership?


3/17


Rotating the SIMs

The typical modes of multi-SIM usage fall into four cases, the choice of whichdepends on preferences, perceived cost of inconvenience and lifestyle.

Several Handsets Multi-SIM Handset

MULTIPLE SIM OWNERSHIP > TYPICAL MODES OF USAGE

1.Does not require to switchcards manually.2.Subscriber can keep SIM-locked phones one for each

operator.

3.Practical limit is 2 rarely dopeople walk around with 3

handsets.

1.Convenience of only carryingaround 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 onlyone handset2.Cards are always on (withlimitations)

3.Handset usually moreexpensive and not that easy

to find (not enough variety).

NOT EXHAUSTIVE

Second Device

1.In some cases it is very difficult to remove theSIM card.2.Some devides as netbooks use predominantlythe data connection.

3.While the SIM is inserted in a netbook, itcannot receive mobile calls, so using the

primary SIM may mean missed calls.

Carphone

Fashionphone

Netbook

Typical modes ofmulti-SIM usage


4/17


Specific actions of theoperator such as promotions

and pricing differences drivemultiple SIM usage.

The mobile industrysecosystem mainly

handsets and niche devices,affect multiple sim usage.

The mobile marketcomposition (prepaid vs.

Post-paid), value brackets,

regulation, etc.

Social composition, norms,rhythm of life and cultural

specifics do affect the

multple SIM phenomenon.

Operator Ecosystem

Market Society

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

MultipleSIM

Usage


5/17


Operator-

relateddrivers

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

Large differencebetween tariffs

on-net / off-net

Large differences between on-net and off-net tariffs stimulates arbitragebehavior one SIM for each operator. The on / off-net difference may be

manifested through headline price or generous on-net bundles.

Aggressive SIMPlacements

Attractive sign-upminutes bundle

(w/o commitment)

Attractivepromotions with

bonus minutes

Frequent promotions where large bundles can be accumulated makepeople keep active SIMs from different operatos and get the best of both

worlds - the so called hamster effect.

Also known as SIM flooding, aggresive SIM placements occur wherean operator wants to be used by a subscriber at any cost, even if that

means giving the SIM away as a present.

Strenght ofoperator brand

When an operator brand is perceived as prestigious and attractive, asubscriber will not give up their old SIM even if they activate a SIM of the

competition.

During aggressive acquisition campaigns operators will include manyon-net minutes as an initial sign-up bonus. Activating this new card then

becomes attractive even only to use the initial bundle minutes.


6/17


Mobile

Ecosystemdrivers

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

Low-cost ofhandsets

The low cost of handsets permits subscribers keep 2 or more SIM cardssimultaneously active without having to switch. This drives multple SIM

usage in cases where the user would normally avoid SIM swapping.

Availability ofniche devices

Availability ofunlocked

handsets

Availability ofmultiple SIM

handsets

The availability of multi-SIM handsets makes it extremely easy tomaintain 2 or more SIMs active without the associated inconvenience of

swapping SIMs or carrying many handsets around.

Fashion phones, car-phones, SIM-slot net-books, blackberries or someconsumer M2M devices (such as Amazon Kindle or personal medical

telemetry) practically require that the same person uses 2 or more SIMs.

Existence ofChannel Fraud

Distributors will activate SIM cards in order to meet sales targets. Thechannel gains from the commission and practically gives away the

activatedSIM cards below value. Thus people carry around many SIMs.

The possibility to acquire unlocked handsets (because they are availableon the market or because they can be unlocked) permits rotating SIM

cards from different operators on the same handset.


7/17


Mobile

marketdrivers

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

Predominantlyprepaid mobile

market

Postpaid plans will typically not create motivation for arbitrage. Inaddition maintaining multple post-paid contracts with varous operators

is expensive. Largely prepaid markets are fertile soil for multi SIM.

Large marketshare disbalance

Price sensitivemarket

Little or noregulation of

churn accounting

In markets with no standardized churn accounting (via regulation orindustry agreement), operators may have long validity periods of SIMs

which enables users to keep several SIMs even without active usage.

In markets where there is a large gap of market share between the leaderthe followers, the followers will typically have aggressive acquisition

behaviour, which (even temporarily) drives muliple SIM usage.

Quality of mobilenetwork coverage

In makets with poor network coverage, people on the move will maintaintwo or more cards to ensure they will always be in range (especially for

travel in non urban areas).

Low GDP/cap markets with price sensitive consumers will look for waysto optimize their telecom spending and therefore be more prone to

arbitrage.


8/17


Society-

relateddrivers

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

Importance ofown number +

existence of MNP

In some markets the mobile number is part of the personal brand; yetin others not at all so - there is no problem carrying various SIMs and

having several numbers.

Personalprivacy

Importance ofprefix

Employer pays

the mobile bill

Some people will keep 2 numbers: a personal one (which will neverchange like a Yahoo account) and a second job-related one. Some people will activate a SIM card just temporarily to put up an ad inthe newspaper that they are selling sell their car and not give their

usual personal number.

People with a lot of time on their hands (unemployed or part-time jobs),will have no problem carrying around and swapping SIM cards. In fact

for an unemployed person cost saving is important.

Value of time andrhythm of life

When the employer pays the mobile bill, personal calls usually have togo on another SIM card. Despite various operator supported solutions

(e.g. dual number singleSIM) multiple SIMs remains a polular choice.

In some countries the mobile prefixes associated with early adoption ofmobile telephony is a symbol of prestige, so people will not give up their

original number even after activating another SIM.

In some countries you communicate different number to members ofyour different social circles. Leaving this group (or person) is easy: just

throw the SIM.

Social circles &relationships


9/17


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?


10/17


Fact 1: Market share of SIMs has lost its traditional meaning. What matterstoday is share of telecom spend. The share battle is in the pocket.

Before Today Relevant Focus

MULTIPLE SIM OWNERSHIP > CHANGE IN PARADIGM

Multi-SIM-ers

Operator AOperator B

Operator C

Operator A

Operator B

Operator C

Lines

Subs

MoU

Reve

nues

Multi SIM: It is a fact of life formobile operators. The amount of

multi SIM usage depends on

various factors and is different indifferent markets. Multi SIM in itselfis not a cause for concern - thequestion is: whats behind it?

Paradigm shift: Usually marketshare means share of SIMs a

con-cept losing its relevance,

because 2 lines belong to onesubscriber who balances the usage.The really rele-vant metric is shareof revenues and in some cases

share of traffic / MoU.

Zero sum: Typically subscriberswere considered as belonging to

one operator only and in order to

change operator they churned, i.e.left the first one. Multi-SIM usagewas not even considered or wasregarded as a rare phenomenon.


11/17


Fact 2: Multiple SIM also creates value

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

Value is created

whenever a subscriberhas a chance to use

the mobile phonewhere he/she normally

would not:

while driving while in the disco while in zone

without coverage

with their usual

operator.

The net impact is the

combination of botheffects and depends

on the proportion ofeach group of factors.

Value is eroded by

multi-SIM usagewhenever there is a

deal-seekingbehavior. From origi-

nation perspective

value is eroded fromforegone subscriber

revenues. Fromtermination loss of

interconnection

revenues.

Valueeroded

Valuecreated

Totalimpact

Fact 3: Market leaders stand to lose

Single SIMScenario

MultipleSIMScenario

1st choiceoperator

1st choiceoperator

2nd favoriteor niche

operator

If subscribers were forced to use only

one operator they would go with their1st choice overall best operator.

If subscribers have 2 SIMs they will

take some of their traffic to the 2ndSIM (whatever the reasons)

The leaders those players who have a better overall offer,who have a strong brand and generally dominate the market

stand to lose. New entrants, niche players or second-tierplayers will chip-away parts of traffic by being present in

subscribers pocket through a 2nd SIM.

Part of traffic

migrated tosecondary

network.


12/17


Strategy towards multiple SIM ownership depends on players market positionand the presence of the phenomenon on the market.MULTIPLE SIM OWNERSHIP > STRATEGY TOWARDS MULTIPLE-SIM OWNERSHIP

Preemptive Strategy

Build loyalty through operationalexcellence and retention initiatives.

Preempt the need for 2nd SIM.

Leader

Follower

Level of Multi-SIM OwnershipVery

presentEarly Stages /Non-existent

Share Win-back

Focused BTL campaigns in orderto win back share of revenues from

muli-SIM subscribers.

Attack: Aggressive Revenue Share Maximization

New entrants and followers see an incremental financial impact, even if they onlywin a small share of pocket of the mobile consumer. Until a balanced revenue

share is achieved, their best strategy is to attack.

PlayersMarket

position

How to addressmultiple SIMownership?


13/17


Makert leaders should realize that not all multi-SIM-ers are the same: differentapproaches 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.

1. Incrase loyalty2. Cross / up-sell1. Become 1stchoice

1. StimulateARPU

Share of wallet (%)

Subsribervalue(MoU)

Preemptive strategyShare-max strategy

For intensive users, theprobability is that we will

not be able to win a lotmore in terms of share.

Cross and up-selling aregood possibilities, butretention actions are a

must.

For low users, ARPUstimulation action should

be applied.

High-value: it is importantto increase share of wallet

as much as possible.(Taking into account all

practical limitations).

For low users where weare not the 1st choice,

effort whould beprioritized AFTER the

other three quadrants

have been addressed.

1. Become 1stchoice (now)

2. StimulateARPU (later)


14/17


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

Total mobile

usage of oneperson

MSISDN 1

MSISDN 2

MSISDN 3

1. The total telecomusage of one

person is splitbetween 2 or more

different MSISDNs(same or differentoperators).

2. The analsysis ofeach individual

MSISDN usage willonly give a partialpicture and will look

like 3 subscribeseach with different

behavior.

3. There is no reliableway to identifiy a

multi-SIM user.

Scoring

Combinedapproach

Scaledbenefits

Usage

data

Scoring

Algorithm

Profile

2

Profile

1

No

clearprofile

Profile

3

Each profile can be identified with different degree

of certainty (a cut-off point during cam-paingndesign and implementation), thus the boundaries

between profiles will be soft. There will be a no

profile category too.

Scale: the benefit (e.g. off-net discount) is given

when a certain volume of minutes is reached. A

multi-sim user (who has the minutes and CANbring them over) will be able to benefit. A low-usage subscriber wont unless he/she incrases

usage (desirable). This separation ensures no

cannibalization especially when identificationalgorithm allows a degree of probability.

%discount

MoU off-net


15/17


The methodology has two main outputs: a customized multi-SIM detectionsystem 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

Objectives &

Deliverables

Main Activities

Data-drivenprofiling and

segmentation

Survey-basedvalidation and

refinement

A B

DESIGN

Implementationof regular

methodology

Run first diagn.report and action

recommendation

C D

IMPLEMENTATION

Define data

extrationquery

Define anti-

cipated MSprofiles

Extract

usage data

Run 1st probe

Adjust input vars,

threshold levelsand processing

algorithm.

Run 2nd

probe

Design

survery

Implement call-out

campaign

Validate input vars,

threshold levelsand processing

algorithm.

WIP:Customizeddetection

algorithm (notvalidated)

FIN:Validatedcustomized

detectionalgorithm

FIN:Automaticalgorithm for

periodicdiagnostic

WIP:First diagnosticreport and

recommendation

Implement

script onchoisen

platrom

Develop

deliverysystem +

interface

Integrate with IT

systems andprocesses

Run first diagnostic

report

Based on output

recommend onspecific course of

action.


16/17


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

1. Strong operatorcompetition 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 promotionsb) The mobile ecosystem complementary devices and trendsc) The mobile market market structure, price sensitivity, etc.d) The society cultural and non-rational factors

3. No one single playercan 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 towardsfollowers 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 SIMphenomenon.


17/17


mmC Group Strategy Consultants

Joaquin Turina 2, 1stfloor28224 Pozuelo de Alarcn, Madrid

Spain

Phone: +34 91 129 8100

Fax: +34 91 714 1888

Web: www.group-mmc.com

Blog: consultantvalueadded.com

Carlos ValdecantosEmail: [email protected]

mmc approach multiple sim blog

Documents