Apple & the Middle East: eSIM-Only Expansion in the Region Is a Warning for Operators Everywhere to Be Ready

The launch of Apple’s latest iPhones will have a characteristic impact on the global embedded Subscriber Identity Module (eSIM) market, with the 17 Air model being available exclusively with eSIM-only support, and the 17, 17 Pro, and 17 Pro Max to be eSIM-only not only in the United States, but also Canada, Japan, Mexico, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates (UAE), Guam, and U.S. Virgin Islands. The long-anticipated expansion of Apple’s eSIM-only regions was expected in Canada and the U.S. territories, and many anticipated Japanese and Mexican inclusion—albeit most expected Western Europe to come first—but the expansive representation of Middle Eastern countries may be considered more unexpected.

eSIM-only is an especially potent driver in the eSIM infrastructure market, as activation rates of eSIM-enabled smartphones remain somewhat low due primarily to user awareness and habit. Forcing the issue by removing the SIM tray completely alters user behavior, and if the relevant smartphone vendor has a significant market share in the region, operators’ market positions may be significantly impacted as a result. Apple has a much lower penetration in the Middle Eastern smartphone market—less than a quarter of the share that it enjoys in North America—but remains a significant player as the source of over 10% of smartphones sold into the region. Therefore, around 10% of operators’ available customer base now lies behind the gate of strong eSIM support capability. The impact is not limited to local operators alone—globally, operators with no or poor eSIM support processes will lose out on the ability to support any Apple-using inbound traveler from this ever-growing list of regions, and as many smartphone manufacturers tend to follow where Apple leads in terms of eSIM strategy, this slice of the customer base will continue to grow.

Dual drivers to eSIM adoption apply in the Middle East, with top-down government- and operator-led innovation and digital transformation initiatives and bottom-up consumer preferences for seamless digital experiences, especially for frequent travelers, contributing to a market that is primed for this eSIM-only transition. The UAE and Saudi Arabia, in particular, are accelerating a digital-first lifestyle, with government-issued digital identity solutions permitting access to a wide range of services and identity authentication functions, and similar initiatives are being advanced in Bahrain, Kuwait, Oman, and Qatar. Local consumers increasingly expect all transactions to be possible instantly over mobile, and acquiring a SIM is no exception, driving user adoption and mitigating the usual risks of negative consumer response experienced by Apple and other smartphone vendors when considering a move to eSIM-only availability. For operators, parity with other consumer experiences is essential—if citizens are able to access virtually all other services digitally, up to and including high-impact governmental functions, an operator failing to enable remote and seamless connectivity activation will become a relative dinosaur. Zain and Etisalat recognized this, moving quickly to keep pace with the regional digital transformation, and will now enjoy the benefit of being known and mature eSIM providers as the new eSIM-only devices begin to ship into the region. Globally, other operators should consider the opportunities available to them by being eSIM-first innovators, particularly as the local operator market shares are susceptible to total disruption if disparity in eSIM capability is highlighted by the implementation eSIM-only policies from major Original Equipment Manufacturers (OEMs) like Apple.

Additionally, mandatory SIM registration laws apply in all of the listed Middle Eastern countries. This is an inconvenience for travelers, which is readily circumvented by eSIM availability, further highlighting the value of high-quality eSIM support for operators in capturing inbound customers. As eSIM support matures in a region, and “first mover” advantage erodes, operators will need to focus on alternative differentiators—particularly seamless and flexible user experiences, especially during the acquisition phase. Capturing customers—especially those who are only short-term, in the case of inbound travelers—will require a completely pain-free signup and profile activation, and the standards will grow ever higher as competing operators grow eSIM capability. Early and targeted data analysis to highlight customer pain points in this market will be essential in carving out long-term dominance.

Assessment of the key eSIM drivers—broadly speaking, eSIM-capable or eSIM-only device availability, consumer expectations around digital transformation, SIM registration/electronic Know Your Customer (eKYC), and tourism—is an essential step in setting the investment timeline of operators, and it is critical to view the issue holistically. Operators must seek to influence the environment to the extent that they can by partnering with relevant stakeholders driving each of these elements, but their ability to definitively shape the conditions in which they will exist in just a few years is limited to these negotiations, and for smaller operators, this is more limited still. A deep awareness of market trends must be cultivated, with the ability to react quickly to changes being core to long-term success.