Every year, MTN introduces 90 million prepaid SIM cards into the market in South Africa, and industry estimates suggest that between 200 and 300 million SIM cards enter the country with a population of about 65 million (including adults and children).
These staggering figures were stated by Ferdi Mulumman, CEO of MTN South Africa, during a press conference following interim results on Tuesday. He noted that these volumes exceed the population of South Africa, which seems illogical and is a colossal phenomenon.
Mulumman emphasized that while these volumes contribute to increased revenue, it is not the revenue that MTN considers sustainable. Ralph Mupita, CEO of MTN Group, previously explained the behavior leading to such volumes in the same presentation. He reported that South Africa has become a multi-SIM card market, where customers hold up to three SIM cards simultaneously and switch networks upon each recharge.
Mupita illustrated this by saying that nine years ago they considered Nigeria a multi-SIM card market, whereas South Africa was a single-SIM card market; the situation has changed drastically. Operators are not passive participants in this process. Mupita described customer value management systems operating in each network—these are best-offer systems that activate when a subscriber does not top up their account for several weeks, sending them an additional offer to retain them.
Customer Churn Mechanism
Mupita stated that the customer churn complained about by the industry is partly created by the industry's own retention tools. These tools target consumers in the mid-to-low price segment who are looking for the lowest available offer. He stated directly: 'Our customers are smart.'
Mulumman pointed out that applying the Rica SIM registration law to a base that churns at such a rate, as well as the quality of these registrations, raises doubts. He also drew a direct link between this and account hijacking syndicates operating in South Africa. He noted that many are aware of market schemes, such as hijacking people's accounts on Facebook, sometimes on Twitter or WhatsApp, and subsequent intervention by syndicates. He added that if KYC levels are properly achieved, fraud will also significantly decrease.
The industry responded by agreeing on a new registration system through the Association of Communications Technology, the operators' industry body, and developing it in consultation with the Ministry of Justice, which is responsible for Rica. Implementation timelines are still being discussed among operators. However, MTN did not wait. The company imposed a limit of 10 SIM cards per person and now requires re-registration if a SIM card remains inactive for 30 days after registration. This second check targets pre-registered SIM cards sold on the streets—SIM cards registered under another person's name and activated by the buyer.
