What will be the impact of Brexit on roaming charges? This is the question that all travellers used to travelling to the UK ask themselves. We can already predict with certainty that regulars crossing the Channel will be short-changed. Here’s why.
Evolution of the roaming market in 2020
- the roaming market before the crisis: $51 billion
- the impact of covid on the roaming market in 2020: -50% (-$26 billion)
- the impact of covid on roaming revenues for French operators: -70%.
- the share of roaming costs in the total revenues of telecom operators: 6%.
- the percentage of roaming charges in the total revenues of European telecom operators: 1%.
- the impact of lower roaming revenues on SFR’s EBITDA: -2%.
To predict the evolution of roaming charges in the UK after Brexit, we must look at the situation in the more global context of Covid-19.
Impact of Covid: the roaming revenue falls by 50%.
There were no miracles to be expected from the telecom operators. In 2020 some of their proverbial pots of gold at the end of the rainbow have dried up. And they won’t be resurrected anytime soon. This is the case with roaming charges, a tax imposed by telecoms operators who have been making huge profits for years until the European Commission stopped it.
With the collapse of travel, roaming charges have been reduced to a mere pittance. Especially in the European Union (where the European Commission had regulated roaming charges), the impact is significant. Travel outside Europe has collapsed by more than 90%, and tourists from outside Europe have deserted the old continent. French operators have estimated that roaming charges will be down by 70% in 2020. Although roaming represents a negligible part of revenues (1% in Europe), the same cannot be said for profits. In fact, the billing of roaming charges represents almost pure profits since they do not entail any costs.
For an operator such as SFR (Altice Group), roaming charges represent more than €100m of profit per year. Their 70% contraction should lead to a 2% drop in EBITDA.
What does the Brexit agreement say about roaming charges?
The Brexit agreement does not contain any special provisions on roaming charges. As the United Kingdom will leave the European Union on 1 January 2021, roaming charges may theoretically be charged. Of course, telecom operators swear by their gods that this will not happen … for the time being. But the British government has already taken the lead and is advising its citizens to find out about the roaming charges that will apply from 1 January 2021.
The impact of Brexit on roaming charges in the UK
Based on past developments in roaming charges, it was already possible to anticipate what will be the rule in the UK after Brexit. When the European Commission had forcibly regulated roaming tariffs in the European Union, specific destinations had been imposed abusive roaming charges. One example is the excessive tariffs that had become the norm for Switzerland (up to €15 excl. VAT per Mb downloaded).
When Brexit is placed in the more global context of how the roaming market will evolve in 2020, it becomes relatively simple to predict a drastic increase in tariffs. No doubt these increases will not apply from 1 January 2021, but it is highly likely that by the second half of 2021 travellers will be hard hit in the wallet.
Take advantage of the reprieve offered to you at the beginning of 2021 to buy a 2nd SIM card and a compatible phone. No doubt operators across the Channel will see this as a great opportunity to quickly acquire new customers. Those who only travel occasionally and do not need a second SIM card will be on the lookout for promotions and marketing operations. We wouldn’t be surprised to see aggressive operators (FREE in France, for example) who also want to take advantage of this deregulation to chase away dissatisfied customers from their competitors’ networks.
Posted in Marketing.