For some, this is term might be new to you, but for the telecos and governments its a real threat to revenues and taxes collected caused by illegal redirection of calls in a practice known as SIM boxing. SIM boxing is a practice in telecommunications whereby a person or group of people set-up a device that can take up several SIM cards (a SIM box) and use it to complete international calls it receives from the Internet as voice over IP (VoIP) and in turn serve them to the in-country mobile network subscribers as local traffic. The SIM boxer thus bypasses the international rates and often undercuts the prices charged by local mobile operators.
According to Derrick Sebbaale former Chief Technical Officer (CTO) at Vodafone Uganda and now an Independent ICT Consultant, in 2016, it was estimated that telecom companies in Uganda on annual basis were losing about $60m due to illegal redirection of international calls traffic. The amount in part led to revenue from voice services to remain flat or grow sluggishly in 2015, 2016 and 2017 – according to telecom revenue analysis in those three years.
How SIM Boxing Works and how to fight it
As stated, the telecoms were estimated to be losing about $60m annually as a result of the gray routing. A loss to the telecom means that they will also be unable to remit the excise duty charge on calls to the government. With the excise duty charge at about 36 percent, that means government revenue loss of about $21.5m annually. These are amounts that can help the government continue to provide services for Ugandans.
As the telecom operators and the government are counting their losses, the unscrupulous individuals that have only spent a large amount to acquire a SIM box machine are reaping at the expense of legitimate business and causing financial loss to government in the form of lost tax revenue. These SIM boxers can breakeven in less than 1 month and continue to rake in profits for years. There is no deliberate under declaration of telecom revenue because of the investment made in order to be compliant with the tax authorities.
The efforts to reduce this vice has led to some arrests. In 2017, six individuals were arrested, and some convicted in court after they were found to have SIM box devices. They had up-to 250 SIM cards that they used to re-route the calls. Increased surveillance by all the telecom companies and the Uganda Communications Commission (UCC) played a role in having these individuals arrested, however the problem persists.
UCC did recommend that operators have SIM box detection tools that need to be updated often because the SIM boxers keep finding new ways of bypassing the traditional operators.
This vice affects the quality of international calls of subscribers and is a threat to both telecommunication companies and government – they should work together to keep ahead or altogether eliminate this ever-evolving criminality.
