Global telecommunications group Bharti Airtel has signed an agreement with London-based Movirtu, a provider of virtual SIM solutions, in which Airtel will offer the Movirtu Share service through its 17 subsidiaries across Africa. The operator launched this service as a test in Madagascar in 2011. The first commercial deployment under the new agreement has already taken place in the Democratic Republic of Congo (DRC), and two more deployments are underway. Movirtu’s patented virtual SIM platform allows mobile operators to provide services to users who rely on borrowed handsets because they cannot afford to purchase them. It also allows users to maintain multiple numbers on the same handset.
Access to mobile services can serve as a harbinger of economic progress for the many millions living in emerging markets where mobile phones are more than just a means of communication. While mobile operators have achieved considerable penetration in Africa, there still remains a vast and untapped market consisting of those who are too poor to own a handset or maintain services, despite the growing availability of lower-cost options. The World Bank estimates that there were 2.4 billion people in the world living on less than US $2.00 per day as of 2010. The 1 billion who live on US $1.00 to US $2.00 per day represent the market being targeted by Movirtu and Airtel. While providing mobile services to this latent market could have significant socioeconomic implications, for the operator it represents a sizable revenue opportunity. With virtual SIMs, it may be able to lock in customers at a nascent stage and later sell them more services as they progress economically and in terms of mobile usage. Also, since the cost of providing a virtual SIM is around US $0.20 as against US $14.00 to US $21.00 for a traditional SIM, the margins can be attractive. In Madagascar, Airtel launched this service under the name ‘Antso Majika’ through its Village Phone Project in conjunction with the International Finance Corporation. According to Airtel, the entire project (which included various services in addition to virtual SIMs) yielded an ARPU of US $12.00 versus the handset ARPU of US $3.00, due to the fact that the operator was able to tap into a previously unexploited market.
The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues: http://www.tarifica.com/TarificaAlert.aspx