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1

F E AT U R E D I N S I G H T S

TELECOM TRANSITIONS: TRACKING THE MULTI-SIM PHENOMENA IN INDIA• More andmore consumers in India are opting to carry and use

morethanoneSIMcardfortheirmobiledevices,switchingbetweenthemdependingonavailableservice,individualneedofvoiceanddataservicesandpricingplans.

• Multi-SIMincidencehasgrownby62%overthelasttwoyears,andaccordingtoNielsenisexpectedtocontinuerisingasthemarketmatures.

• Contrarytopopularbelief,Multi-SIMincidenceincreaseswitheachlevel of SECwith thehighest incidence among themost aff luentSECA.

• Multi-SIMuseismorecommonamongsmartphoneusers.

With the current count of cellular connections at 970 million and the

Cellular Operators Association in India (COAI) expecting this number

to reach 1,100 million by 2020, consumers continue to embrace the

digital age and they’re rapidly seeking ways to expand their mobile

experiences and capabilities.

Multi-SIM use is among the latest trends that Indian consumers are

taking advantage of, allowing them to switch carriers on the fly with

the simple switch of a SIM card. Instead of just carrying one SIM, many

mobile users are dual SIM users. This allows them to switch between

providers to capitalize on varying price, data and service offers from

industry operators.

When customers switch between the operators, they aren’t necessarily

leaving one operator permanently, so the change doesn’t represent

churn in the real sense of the word. When they switch, however, they do

become dormant with the previous operator for periods of time. This

practice has intensified the fierce competition between providers in the

market, forcing them to offer attractive call rates or tariff plans for both

voice calls and mobile Internet. Each operator’s goal is to discourage

users from switching to another operator for specific needs by making

sure its offers are the best.

DELIVERING CONSUMER CLARITY

2 FEATURED INSIGHTS | TRACKING THE MULTI-SIM PHENOMENA

Market-leading operators, identified on the basis of their telecom

revenues, stand to experience the most customer fluctuations,

as smaller service providers tend to make incremental gains in

the competitive environment even if they get a small share of

subscriber’s minutes. They captialise on this by offering cheaper

tariff plans, along with offers on new SIM purchase to attract

customers.

According to the Telecom Regularity Authority of India (TRAI), the

telecom subscriber base has increased by nearly 12 times in the

last 10 years. The average revenue per use (ARPU) that operators

collect, however, has shrunk to one-third during the same time

period, predominantly because of lower calling rates and multiple

competitive operator offers.

Understanding the complete life cycle of mobile usage and on-

going research on how to identify the presence of another SIM

will be key advantages in navigating the competitive landscape.

GIVEN CONSUMERS’ SPORADIC USAGE PATTERNS, OPERATORS NEED TO CREATE REAL-TIME MARKETING STRATEGIES THAT HELP DRIVE HIGHER SUBSCRIBER SPENDING.

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MULTI-SIMS MULTIPLY

According to global data, there are 6.4 billion mobile connections and

3.2 billion unique mobile customers globally. That means that each

mobile customer owns approximately two SIMs - largely due to multi-

device ownership or multi-SIM cards, to take advantage of arbitrage on

pricing schemes.

Nielsen studies reveal that 15% of mobile users in India are multi-SIM

users, and the proportion is trending upward.

SEGMENTING MULTI-SIM USERS

MULTI SIM INCIDENCE IN INDIA (%)

8%

Q4’2013

8%

Q1’2014

9%

Q2’2014

10%

Q3’2014

13%

Q4’2014

15%

Q1’2015

Source: Nielsen

MULTI-SIM INACTIVE USERS: AN INCREASING INCIDENCE OF MULTIPLE-SIM USAGE IS THE PRIMARY CONTRIBUTORY FACTOR FOR A GROWING SEGMENT OF INACTIVE CUSTOMERS (BETWEEN 20% AND 30% OF USERS) ON THE NETWORK.

MULTI-SIM INFREQUENT USERS: THESE SEGMENTS DEMAND VALUE FOR MONEY AND ARE EXTREMELY SAVVY IN OPTIMIZING SPENDS ACROSS SERVICES.

MULTI-SIM MODERATE USERS: PRICE AS WELL AS SERVICE QUALITY GUIDES THE CHOICE OF NETWORK OF THESE CUSTOMERS. USERS MAY PATRONIZE DATA SERVICES OF A NETWORK PROVIDER WITH BETTER 3G COVERAGE AND CALL AND SMS SERVICES FROM ANOTHER.

MULTI-SIM HIGH ACTIVITY LEVEL: HIGH AVERAGE REVENUE PER USER (ARPU) CUSTOMERS WHO OWN MULTIPLE DEVICES COMPRISE MULTI-SIM, HIGH ACTIVITY LEVEL USERS. CUSTOMERS WITHIN THIS SEGMENT ARE UNLIKELY TO BE LURED BY DISCOUNTED OFFERS BUT ARE MORE CONCERNED ABOUT BETTER USER EXPERIENCE.

4 FEATURED INSIGHTS | TRACKING THE MULTI-SIM PHENOMENA

OPTIMIZATION VS. MINIMIZATION

Specifically, cost minimization refers to efforts that less affluent

customers make to minimise spends, while optimisation refers to

users who avail different schemes to curb their total telecom spends.

In India, while it’s easy to think that consumers in lower socio-

economic classification (SEC) groups would be multi-SIM users for

cost optimization, Nielsen research indicates that cost minimization is

a much more critical factor for lower SEC users.

Mobile users from lower SECs strive to keep their telecom spend to

bare minimum, which means they’re less likely than others to worry

about the complex dynamics of holding two or more SIMs.

Further, multi-SIM usage isn’t as common in price-sensitive markets,

but a higher incidence is observed among well to do consumers driven

by higher investments, higher cost of handset and diverse telecom

needs such as data, apps and network quality.

This can be further authenticated by higher multi-SIM incidence among

smartphone users: multi-SIM incidence among smartphone users is at

least 1.5 times higher than it is among non-smartphone users and high

ARPU customers.

% MULTI-SIM BY SEC

Q4’2013

8%9%

10% 10%

12%

16%15%

14%

14%

12%

10%

12%

11%11%

9%8%9%

8%

7%

Q1’2014 Q2’2014 Q3’2014 Q4’2014 Q1’2015

Source: Nielsen

SEC A SEC B SEC C SEC D

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% MULTI-SIM BY SEC

% MULTI-SIM BY HANDSET TYPE

Q4’2013 Q1’2014 Q2’2014 Q3’2014 Q4’2014 Q1’2015

9%10%

11%12%

17%

11% 11%

17%

8% 8% 8% 9%

SMARTPHONE USER NON SMARTPHONE USER

Source: Nielsen

While multi-SIM ownership is more common in higher SECs, it’s

important to note that volumes are driven more by consumers from

lower to medium SEC households.

Rapidly growing teledensity is likely to create a more competitive

environment, with potential for growth and scope for maturity in India.

In the tussle between market leaders and smaller providers there is a

large revenue opportunity waiting to be tapped into.

The focus should be on new category entrants in lower-tier and rural

towns, though telecom dense towns can also provide ample opportunity.

Multi-SIM operators need to offer solutions to deflect the need of

subscribers to switch to other SIMs, and thus tap into the segment.

6 FEATURED INSIGHTS | TRACKING THE MULTI-SIM PHENOMENA

ABHIJIT MATKAR

NIELSEN INDIA

SATRAJIT DAS

NIELSEN INDIA

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Mudit Sikka, Amit Rawat & Anushka Sharma from the Telecom

Practice Group contributed to this issue of Featured insights.

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