ITP Techblog

With travel restrictions in place around the world, telecoms network operators are missing a lucrative source of revenue - roaming charges racked up when their subscribers head abroad.

Spark's half-year result posted yesterday was hit by a $26 million reduction in revenue from "high-margin mobile roaming revenue due to ongoing travel restrictions and border closures" as Kiwis were unable to cross the Tasman and go further afield.

In addition to that, Spark reported that a fall in net migration due to the pandemic put pressure on its prepaid mobile business. Spark's mobile revenue was down 1.2% to $420 million as a result of those factors and the pain is being felt across the industry.

Telecommunications analyst Peter Wise estimated early in the pandemic that the 2019-2020 financial year would see Spark, Vodafone and 2degrees hit to the tune of $114 million in lost roaming revenue, made up of nearly $91 million from New Zealanders heading offshore, with the rest from visitors to New Zealand.

The flip side is that all three operators, which have fixed-line and mobile services, have seen increased demand for local mobile calling, mobile data and fixed-line and wireless broadband services. But it makes for an uncertain time for the telco sector. 

Vodafone today broke the news to staff that it would be laying off an additional 200 employees. 

When it comes to roaming revenue it will also likely be a slow road to recovery. 

In its report Mobile Roaming: Emerging Opportunities, Regional Analysis & Market Forecasts 2021-2025, Juniper Research predicts that roaming subscriptions will take until 2024 to exceed pre-pandemic levels.

In 2020, roaming subscriptions plunged 73% to 243 million, down from 894 million the previous year. Juniper is tipping a recovery to 918 million in 2024, with North America the first to recover. With Covid-19 vaccination programmes well underway in the UK and the US, operators will be hoping that the northern summer allows for increased travel and the roaming revenue that goes with it.

"The months of June, July, and August are usually a crucial time for mobile operators in terms of revenue, with operators often reporting more than a twofold increase in roaming traffic during the summer holiday season," Juniper noted.

"With operators experiencing a decrease of over 650 million mobile roamers between 2019 and 2020, remedial plans are needed for operators to best position themselves to deal with the continuing impact of Covid-19."

Brexit is also a factor as it may interrupt the pan-European roaming agreements the UK enjoyed as a member of the European Union. A move to bilateral negotiations could see new, less-favourable terms tabled and a return to the bill shock Brits used to receive when they were hit with expensive roaming charges on their trips abroad.

Telstra last month reported a revenue drop in its mobile division of 12%, down to AU$4.7 billion, which it largely attributed to reduced roaming. It is in the process of reducing its workforce to the tune of 8,000 people this year.