Coronavirus pandemic will cause substantial operator losses

The Coronavirus pandemic will likely cause substantial operator losses, as roaming revenue remains on hold due to international travel bans and flight cancellations. The surge in network use since the start of the lockdown, is clearly, not the only challenge operators are currently facing. A newly proposed study from Juniper Research is claiming that significantly reduced international travel will likely contribute to the $25Bn loss in roaming revenues.

The study considered risk models related to international travel: medium and high impact. A low impact was also taken into account, however due to the severity of the current crisis, the latter model is becoming increasingly unlikely.

Under the high impact model, predictions state that major disruptions to international travel will occur in the coming nine months – based on falling demand in travel and the implementation of regional travel bans. This study projects that almost 80% of anticipated travel during this period will be cancelled – amounting to 650 million cancelled trips. Based on current data, the medium impact model seems most likely, leading to an estimated loss of around $20Bn.

As the study indicates, a significant amount of loss will occur during the summer months, a popular time for many to take their annual vacation. The months of June and August alone, could set for around $12Bn of the losses.

Unfortunately for operators, these roaming losses cannot be recovered. However, one must take into consideration that the overall extent of the damage of global roaming revenue accounts for only 6% of total operator-billed revenue per year.

In the current pandemic, virtual conferencing provides people with a viable alternative to business travel. However, digital tools of this kind will in no way benefit operators during the crisis. It seems most likely that roaming revenue losses will only be recovered once international travel is up and running.