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Subscribers With Two SIM Cards: The Next Battlefield For Telecom Firms

The next big battle among telcos will be retaining subscribers now having two SIM cards, with half of the 390 million of them expected to be looking at having one mobile number.

According to estimates of the Cellular Operators Association of India (COAI), over 70 percent of the double-SIM users have a 4G smart phone, and in most cases have one slot on a 4G SIM (the other could be 2G). With SIM consolidation these customers are expected to see their average revenue per user (ARPU) per month go up as they move to just a single number (they earlier paid for two connections).

Telcos say double-SIM subscribers (with one 4G connection) were spending, on average, Rs 150-160 on two connections each month, which is far higher than single-SIM users with an ARPU of around Rs 120. This makes their retention financially very attractive for telcos.

The reason for consolidation is simple: Late last year private telcos, including Reliance Jio, increased their tariffs for the first time after three years by 15-40 percent, pushing up the consumers’ overall bills substantially. This forced them to rethink keeping two numbers. Telcos like Bharti Airtel are expecting that ARPUs will go up to around Rs 200 a month in the next few quarters (from around Rs 128 currently) and even to Rs 300 in some time.

Secondly, with hardly any differential in tariffs among incumbents as well as Reliance Jio (earlier many took Jio as the second number because of its data package), whether on data and voice, a key reason for subscribers two keep two SIMs has now become irrelevant.

According to the data of the Telecom Regulatory Authority of India, the country has 1,183 million mobile customers, but only 981 million are active.

Rajan Matthew, director general of the COAI, says: “With the tariff hikes there is really no differential left among competing players on price, one key reason why customers took double SIM. We expect half of them to move to a single SIM. The key clincher now will be not tariff but the quality of service and network.”

Most analysts say the chief beneficiaries of this consolidation could be Bharti Airtel and Reliance Jio, which have a larger coverage of service, especially that of 4G, compared to Vodafone-Idea, which will take longer to roll out in any areas. According to a CLSA report, this is reflected in the fact that Jio continues to control more than 60 percent of the sector’s 4G base stations. But Bharti has increased its base station penetration by 60 percent in the past 18 months and has 1.86 times number Vodafone-Idea has.

Reliance Jio has the added advantage of using its offer of low-cost 4G feature phone (Rs 699) to allure cost-conscious 2G dual-SIM subscribers to upgrade to a single-SIM 4G phone. This would affect incumbent operators who have customers with two 2G cards.―Business Standard

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