Budget-friendly, eSIM-enabled Smartphones Drive Telco Growth

According to GSMA, 2021 saw 850 million eSIM-based smartphone connections.  By 2025 it estimates that will approach 3.4 billion with a low adoption model.  By 2030 they expect to see 6.7 billion connections (76% of all smartphone connections).

In 2022 Apple created the first big wave of eSIM growth when they launched the iPhone 14 as an eSIM-only device.  This boosted consumer awareness and forced eSIM adoption beyond the early adopter community.

A second wave is now starting to occur in the U.S. and Europe as travelers seek to reduce increasingly expensive roaming costs using dual eSIM enabled devices.  Juniper Research projects travel eSIM users to grow 440% globally over the next 5 years.

With this significant shift from physical SIM cards to eSIM devices, and the associated market awareness, telco operators who adopt a digital-first approach will increasingly capture market share from this eSIM trend.

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Regional eSIM adoption

eSIM adoption is not the same worldwide.  The U.S. has strong operator support with AT&T, Verizon and T-Mobile.  Europe and the UK also have healthy adoption from carriers like Orange and Vodafone.  Tech-friendly Japan and South Korea round out the eSIM-friendly regions.

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Malaysia

While heavily developed countries like the U.S. and across Europe are expected to lead the eSIM revolution, even remote, rainforest-covered locales such as Malaysia, has been making low cost eSIM based digital telcos a success.  Despite the geographic challenges and governmental regulatory restrictions, Yoodo achieved a successful digital telco launch in under 6 months, reaching affordability-focused consumers, thanks to an eSIM based, fully digital telco offer.

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Africa

Africa lags behind other regions as the economics of upgrading infrastructure, regulatory restrictions, lack of consumer awareness, and lack of basic coverage, all restrict growth.  Sub-Saharan Africa remains the region with the widest coverage and usage gaps (59% and 15% respectively). Nearly half of the 400 million people without mobile broadband coverage worldwide are from Sub-Saharan Africa.

Despite those limitations, African Wireless Communications reports that eSIM is having an impact across Africa.  Vodacom has seen eSIM device sales boom – with 1,000,000+ devices with eSIM enabled.  One factor driving this level of eSIM adoption is that in Africa, as with Europe, has lots of smaller countries with users moving across borders, necessitating switching carriers regularly.  The other effort driving adoption is MNOs shift towards eSIM-based wearables and smart phones in sub-Saharan Africa.

To improve adoption rates, a shift needs to occur away from top-tier smartphones, as the only source of eSIM enabled smartphone devices, towards more budget-friendly ones.  Once Apple broke the mold by introducing the iPhone eSIM-only device, other smartphone providers such as Samsung and Google jumped in and started adding eSIM to their mid-range devices.  This trend is expected to continue and will likely push phone manufacturers to soon introduce eSIM-only smartphones at the bottom end of the price scale.  

Mobilise reports, “Around 2020, the most affordable eSIM smartphone was priced at around $400 and there were only 4 eSIM smartphones to choose from. Fast-forward to 2023 the most affordable smartphone is now priced around $300, and the total number of eSIM-capable smartphones rises to 82 devices.”  OEMs will further drive costs down as the pace of adoption increases.  We are likely to see newer smartphone manufacturers drive this movement as price disruption often comes beyond the incumbent leaders.

While MNOs and MVNOs can drive eSIM adoption through their offers and OEMs can launch eSIM-based products, governments across Africa can play a part too.  Africa HR Solutions reports that Big Tech may be the next thing to boom in Africa and certain IT and Telecom-friendly governments will accelerate progress.

Kenya, the “Silicon Savannah” has a forward-focused government.  Kena has a “Konza Technopolis” smart city project, significant mobile penetration with 66 million subscriptions as of 2023, a National Broadband Strategy that is focused on improving access and quality of service and building out infrastructure (undersea fiber-optic cables).

Rwanda, one of the smaller African countries, has a government that is heavily involved in moving tech forward.  They’ve allocated $100 million to the Kigali Innovation Fund and promoted development of the Kigali Innovation City, as a tech hub to attract tech companies and investors.  The country’s telecom network includes 4G and nationwide fiberoptic networks.

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LATAM

Latin America is on the cusp of an eSIM revolution.  In 2023 they had only 5% eSIM smartphone connections.  By 2025 it is expected to triple to 16% and reach 75% by 2030, boosted by eSIM-only smartphones, 34% of MNOs with eSIM services.

GSMA recently held their M360 LATAM and CLTD 24 event in Mexico City to promote telecom growth across Latin America.  This major telecom convention includes industry and government leaders. Much of the information gleaned and relationships built at this conference will influence governmental regulations, investment and industry support.  With eSIM adoption growing, it is expected that forces will align to support it.

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Telcos with an eSIM focus

Telecom operators are increasingly launching brands targeted towards the budget-conscious smartphone consumer with eSIM functionality.  Here are some examples.

The 4^th Japanese telecom operator, Rakuten Mobile, launched as an MVNO in 2014 and MNO in 2019, offers affordable eSIM compatible devices (Rakuten Mini and Big-S) to target tech-savvy users who are looking for affordable and flexible mobile plans.

Indian telcos Bharti Airtel, Jio, and Vi have been offering eSIM support across a variety of smartphones, including budget-friendly options. They are attracting consumers by focusing on convenience by simplifying the switch to digital SIM technology.

Google Fi, a U.S.-based MVNO, leverages eSIM technology with its lower-priced Google Pixel smartphones (such as the Pixel 6A at a quarter of the price of an iPhone 14). This allows them to provide seamless network switching and flexible plans that appeal to travelers and cost-conscious consumers alike.

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Operator effectiveness with eSIM still lacking

Most telcos incorporating eSIM technology have not yet realized the full benefits from eSIM.

Activation.  While installing a physical SIM card seems pretty straightforward to most consumers, waiting for an email with your QR code, and manually scanning it can lead user error, making the eSIM process not appear as easy as suggested.  Lack of eSIM consumer awareness and perceived complexity with the activation process can deter non-tech-savvy customers from going the eSIM route.

Store Visits.  In some regions, regulations demand in-person identity verification prior to activating a mobile device.  This forces consumers into physical stores, eliminating much of the convenience that eSIM brings, and digital activation and onboarding have to offer.  Operator legacy systems, not yet fully integrated with digital-first processes, can also force customers into shops for identification or administration requirements that can’t be done fully online.

Legacy Systems and eSIM Integration Challenges.  Many telco operators haven’t committed fully to eSIM technology, offering it instead on a limited range of devices and plans, lowering the effectiveness of eSIM initiatives.  The other problem is that telcos are not investing in integrating backend systems (digital onboarding, customer management, and service provisioning) with eSIM to deliver a seamless customer experience.  System upgrades or transitioning to a digital-only platform is the logical next step for many operators.

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Capturing the opportunity brought by low cost eSIM-enabled smartphone begins now.

While eSIM is still in the transition stages for many operators, savvy telcos who recognize the opportunity that the initial wave of budget-priced eSIM driven smartphones creates, can capture market share now.

While upgrading legacy software and hardware can often require years-long focus, staffing reallocations, and monetary investment, there are other alternatives that nimble operators can leverage to move quickly.

Launching a digital-only second brand that connects with a targeted audience, whether that is prospective customers tired of high-cost plans, travelers who are done with expensive roaming charges, or community-focused groups like gamers, environmentally conscious consumers, or music fans, can be a successful brand launch option.

To do that you need a digital BSS partner who can move from concept to operable, custom-tailored BSS platform quickly. triPica’s cloud-based, API-driven SaaS BSS powered by AWS, does that.  It can be custom tailored to you (no shared infrastructure) so you can launch a new digital brand in as little as 4 months.  That’s something you can’t accomplish by repurposing your in-house infrastructure.

To learn more about how triPica can turn your marketing vision into an operable reality, reach out and tell us about your project.