Paying less: The lifting of roaming charges in Europe will cut the costs of customers like these in Marseille, France. Picture: BLOOMBERG
Paying less: The lifting of roaming charges in Europe will cut the costs of customers like these in Marseille, France. Picture: BLOOMBERG

Paris — Long an important source of revenue for telecoms companies, roaming charges will be lifted in Europe from June 15, raising pressure on operators in a tight market.

Roaming charges within and outside Europe account for an average of about 5% of sales for telephone operators in Europe, estimates Sylvain Chevallier
of BearingPoint.

But the effect of the new measure will differ for corporate and individual clients, he adds.

On the Spanish market, subject to wide seasonal variations in business due to a reliance on tourism, Telefonica estimates the end of roaming charges in the EU will lead to a 1.2% drop in its sales this year.

But the change can hardly come as a shock for telecoms operators, according to Victor Marcais of Roland Berger, who noted the plans have been in the works for several years and were "largely anticipated".

"If the operators are not ready, it will be more their fault than anything else," said Dexter Thillien, an analyst with BMI Research, adding: "It has been very gradual."

Still, telephone operators are taking different approaches as they gear up for the change. In Italy, for example, Wind-Tre says 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 and Bouygues did away with the fees in May. A fourth company, SFR, is expected to follow suit on June 15. It will be hard to tell exactly how much the move affects telecoms operators since they no longer detail the revenues in their filings.

The European Commission estimates the end of roaming fees will cost European telecoms operators €1.2bn.

The market generates €4.7bn a year, according to European telecoms regulator Berec. But the share of revenues from roaming charges already significantly declined in recent years as charges for calls and text messages dropped 90% since 2007 and data charges declined 96% since 2012 under the EU bloc’s regulations.

But the telecoms business varies greatly from country to country, with Europe’s southern countries relying more 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 revenues from roaming fees also helped finance the costs of reinforcing networks [for] seasonal peaks," said Isabelle Jegouzo, who represents the European Commission in France.

The wholesale market — business among operators — was one of the main stumbling blocks in discussions as some operators were pushing for high prices while others sought to lower them. Countries in the south wanted the highest prices and those in the north the lowest, said Dexter Thillien at BMI Research.

AFP

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