'Unhealthy' subscriber turnover from SIM swapping—Globe
(Inquirer, Erwin Oliva)

Globe officials say this practice has generated a negative impact on the company's mobile phone business since it only created an unhealthy monthly churn of subscribers.





WHEN rival operator Smart Communications introduced the (subscriber identification module) SIM swapping promo in 2003, Globe Telecom hesitated for nine months but eventually followed suit in early 2004.
Two years later, Globe officials say this practice has generated a negative impact on the company's mobile phone business since it only created an unhealthy monthly churn of subscribers.

SIM swapping involves either bulk or retail swapping of SIMs between rival operators. The practice, which was more of a marketing strategy, invited subscribers to swap their existing SIM - either from Smart or Sun Cellular -- for a Globe SIM. This created a temporary frenzy in the local market.

"It is a very unhealthy practice. When our competition started this in
2003, we hesitated for nine months. We really decided we didn't want to do it because we're concerned [about] the rotational churn," said Gerardo Ablaza, Jr., Globe Telecom president and chief executive officer, after an investor briefing on Monday.

"But by early 2004, it became apparent that if we don't do it, we will be at the short end of the stick because it will become one way. So we started doing it in early 2004. But personally I was never in favor of it," he added.

SIM swapping does not make for a good business strategy, remarked Ablaza, "My personal preference is to stay away from it."

The Globe official disclosed that their gradual withdrawal from this practice since it will save the company about 300 million pesos per quarter "or more" on the cost of operating SIM swapping.

"There are also hidden cost in the network because if you do this SIM swap, you have to have some provisions in the network which takes up capacity, which also translates to cost. So once you exit from SIM swapping, you now can use that capacity for more creative operations," he explained.

SIM swapping has apparently become a "trading activity" for some enterprising Filipinos taking advantage it, said Ablaza. "Some parties are giving out incentives. There are times that some are giving five for four SIMs swapped. So this creates a margin that makes a lucrative activity."

An estimated five million of 34 million subscribers are involved in SIM swapping activities, according to Globe.

In the first quarter of 2005, Globe’s total number of subscribers hit 3.8 million, a 73 percent increase compared to the same period in 2004. The net addition of subscribers slowed down to 33 percent, or 400,000, compared to the same period in 2004.

Increased numbers of its gross and net subscribers were driven mainly by the strong take up of the re-launched Touch Mobile pre-paid brand designed for lower-income subscribers, Globe said.