South Africa produces nearly 10-million SIM cards a month, or 120-million a year. It’s an extraordinary waste of money and resources, and terrible for the environment. And it has been going on for years.
Cell C CEO Jorge Mendes disclosed these shocking numbers last week at a media update on the turnaround he is leading at the long-struggling mobile operator.
Every six months the South African mobile industry connects about the same number of new plastic SIM cards as the country’s population of about 65-million people.
Einstein is often credited with saying that the definition of insanity is doing the same thing over and over and expecting a different result. He never actually said those words — the origin of the quote is unknown — but printing millions and millions of SIM cards every month is surely the textbook definition of insanity. It must be stopped — but how?
Local industry players often refer to the wasteful practice as the SIM card “washing machine”. Operators distribute up to 10-million of these plastic cards every month in the hope that they’ll get 500,000 real customers out of it. They fret — perhaps with justification — that if they don’t do it they’ll quickly lose market share.
A (partial) solution is staring the mobile operators in the face: embedded SIMs, or eSIMs. These do away with the need for plastic SIM cards, provided the end user has a phone that supports the technology — and there are millions of devices in the market that already do. So, why aren’t they pushing eSIMs a lot harder?
The answer may lie in the fact that this technology makes it easier for consumers to switch networks or simply try an alternative with little risk or effort, which would reduce customer lock-in and drive churn. This is a real threat to the bigger, more established players, and may be the reason they don’t appear keen to encourage the adoption of eSIMs on their networks (you can get one, if you ask for it).
I don’t see this continuing for another 12 to 24 months. There is just too much wastage
— Jorge Mendes
Those who travel frequently will likely already know about the power of eSIMs to save them money. Gone is the need to pay expensive roaming fees or buy a local physical SIM card when abroad: users simply buy a data and voice plan from an international eSIM provider before they depart, and switch to it before they land at their destination.
There are other downsides of wider eSIM adoption for mobile operators.
- With the rise of mobile virtual network operators (MVNOs) — branded mobile communications services from the likes of Capitec and Shoprite — consumers have never been more spoilt for choice. With an eSIM it’s just as easy to switch to an MVNO as it is to move to another mobile network operator.
- A decreased reliance on physical SIM cards could disrupt the operators’ retail model and require a shift to digital services, which could lead to store closures.
But there are some clear advantages for network operators too, including reduced operational costs (printing all those SIM cards costs a lot of money) and the ability to provide an improved customer experience, thereby hopefully improving customer stickiness even as switching to other network providers becomes easier.
The operators’ key performance indicators “override what should be a logical decision” by industry players to move aggressively to eSIMs, said Mendes. “I don’t see any of them stomaching this for more than a month. Executive committees and shareholders don’t like the metrics. But it is wasteful, and the big winners are the SIM card providers.”
As eSIM support expands from higher-end phones to the mid-tier and entry-level space, operators will have to rework their retail-led business models in favour of digital offerings and online self-service facilities. Change is difficult, but they’ll eventually have no choice — consumers will demand it.
Mendes said he does not expect the current situation to endure for much longer. “I don’t see this continuing for another 12 to 24 months. There is just too much wastage.”
Some operators, including MTN and Telkom, have begun ordering biodegradable SIM cards, which they say will reduce the environmental harm. But the simple fact is that the cost of printing all these plastic SIM cards is ultimately passed on to consumers. eSIM technology provides an elegant solution to this obscene wastage.
McLeod is editor of TechCentral
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