Telefonica Movistar announces end to roaming charges in Europe

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Here are the facts : Telefonica’s Movistar has informed its clients that from June 15 it will put an end to the roaming surcharges for all its tariffs across Europe. Our analysis: this means that all clients with a contract, or prepaid or Fusion will have the same tariffs as they do in Spain when they travel to the EU, Iceland, Norway or Liechtenstein. This move is the culmination of a process of negotiation and gradual reduction in tariffs (c. 90% since 2007) which lasted approximately 10 years. According to the company, the proposal is in line with its expectations. The impact of roaming (total and not just in Europe) is about 2% of the group’s global income, so not all of its revenues will be affected.

Telefonica pointed out that although the impact will be more negative in markets like Germany or the UK, this will be partially offset by Spain. As far as its competitors are concerned, Vodafone Spain made a similar move for the EU, the US, Iceland, Liechtenstein, Norway, Switzerland, Albania and Turkey. In this way, it took action ahead of the enforcement of the European regulation on roaming, extending to all its mobile clients the benefit which its contract clients already enjoyed. And finally ORA Spain created “Go”, eliminating roaming surcharges on just some of its tariffs for the time being.

In opinion of GVC Gaesco’s analysts the objective is that roaming increases revenues’ volume, with the elasticity of demand compensating for the dent in income.

In this way, the main ORMs would not increase prices in their respective domestic markets. In any event, we predict operators will sign new agreements in response to this regulation.

In the Spanish market, the aim is to raise prices in exchange for offering clients more value (the “More for More” strategy): faster fixed/mobile broadband, content, premium, an increase in minutes for voice data, roaming like at home.




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