Back in the day, my friend used an ISP that let you have free Internet (33.6k modem!) so long as you installed their toolbar and clicked on junk that popped up occasionally.
They went bust quite quickly, as did a number of similar offerings. The connection was hideously slow and the adverts just got larger and larger and more annoying. Most customers fled before the company actually died.
Advertising-supported models like that don't really work. A lot of smartphone apps try it but I don't see how the advertisers make their money from it - you can be on Angry Birds Free all day long, it doesn't translate to sales in proportion to the money you have to spend to be there. And the app author really doesn't care because he can offer a £1.99 "no ads" version and make money if his app is any good anyway (so the adverts are really his way to annoy customers into giving HIM money). Sure, you can make money if you hit a big title by accident but who'd have thought Angry Birds would be that successful and who knows what the next title will be?
Now, Google, for example isn't the same - the advertisers spend millions to get on there but they at least have a chance of translating into some money for the bigger companies and Google provide a wealth of tools to target your advertising (even on smartphone, now, I believe). Otherwise, everyone I know who thought they were being a genius and advertising their tiny little 1-man company on Google ads either burned through all their cash in literally minutes with no return or could not measure what the return was (with trackable Internet ads? Come on...) and blindly pumped money into it.
Advertising-funded business is a fickle and dangerous area to stray into, especially without a lot of knowledge of the industry and big players on your books. In this case, your viewers won't convert - you've expressly targeted cheapskates who don't want to buy a contract - even with a phone they already own -which is something that 90% of us have now, or even PAYG, and who are willing to sacrifice a lot of convenience for that "freeness". Just how much do you think they will spend on the adverts that they will be trained to ignore within seconds of using the SIM?
Never target your business at a customer that is going to extremes to NOT spend money with you. Like the ISP who tried to run lots of state-of-the-art complicated and expensive telephony hardware on the basis of you watching ads on your 640x480 screen, you'll go under. The people who are your main base of customers are already determined NOT to spend money, and quite likely to circumvent anything you can put in their way. As such, your income source (the advertisers) will spike and then die off very quickly.
You want to shock me into changing my SIM to your company? Offer me something nobody else does, not add to the existing tripe that everyone already sees too much of and hates. Like, oh, I don't know, decent roaming rates around Europe.