Who will win the eSIM race?Who will win the eSIM race?

Telecom operators are facing a shift as the once-secure stronghold of roaming revenues comes under threat, with agile enterprises emerging as formidable contenders in this space. That would have sounded unlikely a decade ago. Roaming revenue has always sat squarely in the domain of mobile operators. But the eSIM has thrown a spanner in the works since Apple made it mainstream post-iPhone 14.

Critical-mass adoption of eSIM seemed a way off then, but it’s a far less distant reality now. If you believe projections, sales of global eSIM-compatible smartphones are on track to represent over half of phone sales in 2028. That’s thanks to a number of developments fuelling that shift. One noteworthy monkey wrench in the telco engine is the Travel eSIM, a blessing of convenience for consumers’ roaming needs, but potentially a painful inconvenience for every operator if they don’t adapt quickly.

eSIMs killed the bill shock

For all the technologies that have seen break-neck-pace evolution over the last three decades, the SIM card wasn’t one of them – not until the eSIM. The longwinded status quo of SIMs probably has been very stable, but they’ve proven laborious for any consumers wanting to replace them. The deal for anyone traveling outside the EU was, ‘if you don’t want to buy a new SIM card locally at your holiday destination, prepare for costly roaming fees’.

Things are different with eSIMs, permanently soldered onto the phone’s motherboard and fully programmable so you can instantly swap between multiple mobile providers’ networks – no more playing around with physical cards and the high chance of losing your home network SIM. The Travel eSIM is an evolution of that convenience: prepaid eSIMs sold directly from enterprises, often as a bolt-on product bundled in with existing services. There are lots of these already, from travel companies, security vendors (e.g. NordVPN via their Sally offering), French supermarkets (e.g. Carrefour), and even specialised eSIM data plan providers (e.g. Holafly).

The TL:DR of why someone would want a Travel eSIM is ‘no bill shock.’ Travel from Europe to America and you just have to virtually switch your phone to a pay-as-you-go eSIM with, for example, AT&T, Verizon, or T-Mobile. There’s no need to physically visit a brick-and-mortar store or airport kiosk to swap SIM cards. You can completely self-manage data usage, monitor consumption in real-time, top up as needed – all inside an intuitive web portal or mobile app (Holafly is a great example of this). Traditional roaming has never been that flexible or cost effective.

This is obviously exciting for consumers, but stress-inducing for operators. If Travel eSIMs reach critical-mass adoption, it would turn every eSIM-capable phone in a consumer’s hand into a storefront for various connectivity vendors.

If you can’t beat ‘em…sell your own Travel eSIM

It would be unfair to say telcos are oblivious to how lucrative Travel eSIMs are. Some are trying to sell their own Travel eSIM packages. Vodafone, for instance, recently announced it will be offering ‘eSIM Go’ to fintechs, energy utilities, retailers, charities, and football clubs. Different name, same solution.

The impetus for other telcos to follow suit is that Travel eSIM users are forecasted by Juniper Research to grow 440% globally over the next five years. Another estimate suggests data roaming usage will generate $50 billion in revenue come 2027, driven in part by travel eSIM. That’s a lot of money to miss out on.

As for who will collect on that pot, expect a tug-of-war between MNOs and enterprises that choose to sell these packages. The challenge for telcos is that eSIM has democratised global connectivity, allowing companies with little telco expertise to launch their own solution. This convenience extends to consumers, and not just while managing data but buying the package – especially when bundled with other services like the travel package for your holiday in Bali.

The good news for operators is we’re still in the early days of Travel eSIM. Analysys Mason’s metrics show consumer awareness of eSIMs is low. That means most consumers don’t necessarily know where to look for a Travel eSIM package. As long as that’s the case, operators should either promote Travel eSIMs directly to consumers, or partner with enterprises to bundle services. It’s also worth noting, according to Kaleido’s research, that customers are more likely to buy a Travel eSIM from a known mobile operator brand than an unknown eSIM provider.

There’s an old adage, though, in tech: “there are no bad products, only bad prices.” Debatable as that statement is, price will likely be a determining factor for which Travel eSIM package consumers flock to. Operators would do well here to price their offerings competitively. The usability of any app housing data management will also be crucial. Any unnecessary friction for consumers will spur them to look for alternatives that reduce time wasted.

Of course, telcos need not worry too much. No brick-and-mortar grocery store is likely to start laying down mobile network infrastructure anytime soon. Ultimately, consumers want quality connections, which telcos are more likely to provide as long as they control the networks. But with lots of enterprises looking at Travel eSIMs to diversify revenue streams, operators shouldn’t rest on their laurels either. The butterfly effect of international roaming fees and soaring adoption of eSIM-enabled devices will accelerate the threat to traditional roaming revenues. With Travel eSIM, there’s a baseball positioned in front of operators. All they have to do is swing.

Experienced Roaming Engineer, Roaming Product Manager and Sales Account Manager. Ann has been working in the Telecommunications Industry and more particularly in roaming for more than 25 years. Currently focusing on bringing the right roaming and interconnectivity solutions for IoT/M2M, Mobile Private Networks and MNO/MVNO/E/A and 5G Roaming Solutions.