WiFi Drops When SIM Inserted
It seems to be WiFi region code problem or something.

I also had the same problem. My parents live in Iran and when I brought the phone to Malaysia, it's fixed. But when I sent it back, same thing happened after they inserted the SIM card.

I found a link that might be useful, it might help: http://repo.xposed.info/module/com.majidse.xwifix. I still haven't tested it yet though.