Brexit: which impact on the roaming charges? [Study]

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.

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.

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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.

By Pierre-Nicolas Schwab Pierre-Nicolas est Docteur en Marketing et dirige l'agence d'études de marché IntoTheMinds. Ses domaines de prédilection sont le BigData l'e-commerce, le commerce de proximité, l'HoReCa et la logistique. Il est également chercheur en marketing à l'Université Libre de Bruxelles et sert de coach et formateur à plusieurs organisations et institutions publiques. Il peut être contacté par email, Linkedin ou par téléphone (+32 486 42 79 42)