Dual-Sim phones double growth pace of MEA smartphone market

Much has been written about the rapid growth of the Middle East and Africa (MEA) smartphone market over the past couple of years, with IDC's latest figures showing smartphone shipments to the region increased by 115 per cent in the two years to this year's second quarter. Much less talked about, however, has been the surge in dual-Sim phones over the same period, with shipments of such devices increasing by 291 per cent within the smartphone sector.

Dual-Sim phones include all types of handsets that can hold two or more Sim cards. And these devices accounted for a staggering 71 per cent of the region’s smartphone shipments in the second quarter, as well as 57 per cent of the region’s feature phone shipments.

There are also multiple-Sim phones that have slots for as many as eight Sim cards, but these have yet to gain popularity in the region.

Within the dual-Sim category, dual standby is now the main technology in the market.

The capabilities of dual-Sim phones have evolved considerably in recent years – many early dual-Sim handsets allowed only a single standby, wherein a mobile phone had two Sim cards, but the user had to make a manual switch from one card to the other. While the older types are still available in the market, the current technology allows simultaneous use of two Sims, and a caller no longer needs to opt to use one card or the other.

Dual-Sim phones are proving popular in emerging markets around the world, particularly where reception may be poor in one area on one network, but good on another. Under such circumstances, consumers may prefer to have more than one Sim card in case they encounter connectivity problems on a network.

Dual-Sim phones are also much more common in countries where cellular operators do not dominate phone retailing, as they generally do not want to sell phones that can handle more than one Sim. In this regard, the MEA region is fertile ground, with operators accounting for only 11 per cent of overall phone shipments in the region.

A growing number of vendors have caught on to the increasing popularity of these devices, and have launched dual-Sim products of their own. Dual-Sim handsets now account for a high proportion of shipments for many of the region's leading vendors. For example, dual-Sim handsets accounted for about two-thirds of all Samsung smartphones shipped to the MEA region in the second quarter, and 75 per cent of the devices shipped by Huawei.

Convenience is key to the growth of dual-Sim phones. Many people in this region have several phones – usually one for business and one for personal use – so having one handset that gives them access to all their numbers is a key advantage. Another motivating factor is the desire to enjoy deals from different operators, as charges play a key role in determining the network choices that consumers make in this region. There is also the fact that many of the region’s expats travel back and forth a lot, and like to hold on to their old numbers from their home countries.

There is a considerable difference in the growth rates for dual-Sim devices in the Middle East versus Africa. Growth within the Middle East is less spectacular as key markets have already reached more than 100 per cent Sim penetration and usage habits have already been established. Growth in Africa, however, is much more pronounced, at the same time as smartphone use itself is much lower.

As technologies evolve and usage habits change over time, it will be interesting to see how this segment develops. But the surging popularity of dual-Sim capability has already resulted in it becoming a key feature that all vendors must bear in mind if they want to make a big impact in the Middle East and Africa.

Isaac Ngatia is a senior research analyst at IDC MEA.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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