Saying goodbye to SIM cards in South Africa

South Africa’s mobile industry produces a lot of waste in the form of plastic SIM cards, but the industry is increasingly shifting to electronic SIMs (eSIMs).

According to Cell C CEO Jorge Mendes, the industry’s high churn rate means that many SIM cards are issued, but may not result in long-term revenue-generating customers.

However, the issued SIM card figures are still key performance indicators (KPIs) used in the industry, and shifting to eSIMs will knock mobile operators’ reported performance.

“Unfortunately, the KPIs override what should be logical as a decision,” said Mendes.

“In one month, you suddenly connected 100,000 eSIMs instead of issuing four million plastic SIMs. There will be a negative 3.9 million subscribers reported.”

He explained that mobile network operators don’t have the appetite to show this from a KPI point of view.

“They may not even be real subscribers in terms of revenue generation, but I don’t see anyone stomaching this for more than a month,” said Mendes.

“It’s the courage of who goes first and who shows negative three million or six million subscribers in a quarter or two-month period.”

In this regard, Vodacom CEO Shameel Joosub says his company is starting to take the plunge.

“We’re pushing it, you know, making it more aggressive. Cleaning it up, but also trying to find a longer-term, more sustainable process,” said Joosub.

The network operator has started implementing stricter rules to reduce the plastic waste associated with plastic SIM cards.

“We’re trying to take a tougher measure because we have a lot of wastage in the South African environment, which has been the case for more than a decade now, I would say,” said Joosub.

“Effectively, we’re trying to bring that down by stricter rules. Cutting off inactives and that kind of thing faster.”

However, he noted that Vodacom needs to regenerate the numbers.

“We’re not at the stage where I’d say we’ve completely reduced the amount of plastic. That part will come from eSIM,” said Joosub.

He added that Vodacom must amend its customer registration process to bring it up to date.

“Things have changed, and we need to be able to do things like biometrics,” said Joosub.

“That will give rise to better customer registration and, in turn, less SIM cards, or eradicate SIM card wastage.”

According to Mendes, eSIM support was previously limited to expensive, higher-end devices, but the technology is starting to filter into medium-range and entry-level handsets.

“I think eSIM is becoming more prevalent on a lot more devices. So, you’ll start seeing that ramp up and grow,” he said.

However, he noted that eSIMs are currently more expensive to register than physical SIM cards, which he said is likely the result of commercial constructs.

“There’s no reason why the digital format should be more expensive than the physical format,” said Mendes.

“I think that will come down and you’ll start seeing a bit of competition in that space.”

Vodacom and MTN are seeing more eSIM demand

South Africa’s largest mobile network operators, MTN and Vodacom, say they have seen growth in eSIM adoption among their customers.

MTN South Africa told MyBroadband that eSIM adoption among its customers has increased steadily in recent years.

“This growth is largely driven by the increasing availability and popularity of smartphones that are eSIM-capable, making it easier and more convenient for customers to adopt the technology,” it said.

While most of MTN’s customer base still uses physical SIM cards, the number of eSIM users grows yearly.

“We expect this trend to continue as digital lifestyles evolve and customers seek more flexibility, especially those using dual-SIM functionality or requiring remote provisioning for devices,” MTN SA said.

“MTN remains committed to offering our customers choice, convenience, and future-ready technology through continued support of both physical SIMs and eSIMs.”

A Vodacom spokesperson told MyBroadband that the operator has seen eSIM adoption grow and currently has 1.5 million eSIM-enabled devices on its network.

They highlighted several use cases that are driving eSIM adoption.

“There is an interest from international customers travelling to South Africa, who are specifically looking for an additional number to use while they are in the country,” they said.

Additionally, eSIMs are also popular among South African customers who travel abroad.

“These are customers who typically convert their plastic SIMs to eSIMs as they prepare to travel to their foreign destination,” the spokesperson said.