Long an important source of revenue for telecoms, roaming charges are to be lifted in Europe starting on Thursday, raising pressure on operators in a tight market.
Roaming charges within and outside of Europe account for an average of about 5 percent of sales for telephone operators in Europe, BearingPoint associate Sylvain Chevallier said.
However, the effects of the measure are to differ for corporate and individual clients, he added.
In the Spanish market, subject to wide seasonal variations in business due to a reliance on tourism, Telefonica SA estimated that the end of roaming charges in the EU would lead to a 1.2 percent drop in sales this year.
The change could hardly come as a shock for telecoms, Roland Berger partner Victor Marcais said, adding that the plans have been in the works for several years and are “largely anticipated.”
“If the operators are not ready, it will be more their fault than anything else,” BMI Research analyst Dexter Thillien said. “It has been very gradual.”
Still, telecoms are taking different approaches as they gear up for the change.
In Italy, for example, Wind Tre SpA said it implemented the European requirements two months early, while its rival TIM said it would adhere to the new rules the day they come into effect.
In France, Free expanded the reach of its roaming-charge-free zone in March, whereas Orange SA and Bouygues SA did away with the fees last month.
A fourth company, SFR, is expected to follow suit on Thursday.
It will be hard to tell exactly how much the move affects telecoms since they no longer detail revenues in their filings.
The European Commission estimates the end of roaming fees would cost European telecoms 1.2 billion euros (US$1.34 billion).
The market generates 4.7 billion euros a year, the Body of European Regulators for Electronic Communications said.
However, the revenue share from roaming charges has already significantly declined, as charges for calls and text messages has dropped 90 percent since 2007 and data charges has declined 96 percent since 2012 under EU regulations.
Meanwhile, data traffic has grown 100-fold, the EU said.
However, the telecom business varies greatly from country to country, with Europe’s southern nations relying heavily on tourism compared to their northern counterparts.
“Southern countries like Portugal or Greece have a lot of temporary clients and fewer with longer-term plans, so revenue from roaming fees also helped finance the costs of reinforcing networks to help deal with seasonal peaks,” European Commission representative for France Isabelle Jegouzo said.
The wholesale market — business among operators — was one of the main stumbling blocs in discussions as some operators were pushing for high prices while others sought to lower them.
The price per gigabyte was established at 7.70 euros, which is set to decline until 2022.
Operators are allowed to apply surcharges — in accordance with local regulators — if losses linked to roaming surpass 3 percent of annual net profit.
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