Many of us might find tourists irritating. They constantly complain about how hot it is, spend way more than they should on their meals, and seem scared of every spider. However, tourists could be what saves the telcos.
In the current economic climate, with more Australians opting for cheaper MVNOs, tourists might be the only way for profits to go up for Telstra, Optus, and Vodafone.
Although you may think, “So what if their profits go up,” the blunt reality is that they cannot invest in 4G and 5G infrastructure if they don’t have the money to do so.
The challenge that Telcos currently face
Ever since the covid-19 pandemic, the global economy has become much worse. Therefore, the prices that telcos have to pay for their infrastructure, staff costs, maintenance, etc., have all risen. Resultantly, these extra costs are passed onto the consumer, increasing their phone bills each month.
Many customers are leaving the Tier 1 telcos to go onto one of their MVNOs. Although the MVNOs might not have fantastic coverage, most of them will have good enough coverage for the average city dweller. However, because these MVNOs all use one of the big three’s electromagnetic spectrum bands, the average profit per person has gone down.
Why tourism can help
Australia is a tourism hot spot. People from all over the world fly over here to enjoy our beaches, sunshine, and animals like koalas that you don’t get anywhere else. If the profit per person is going down for the telcos, the only way around it is to increase the population via tourism.
The more people are in Australia, the more people will buy their SIM cards, even if they just use them for a week.
Before Covid-19 struck, subscriber growth outpaced the population. This meant the speed at which people were buying SIM cards was faster than the speed at which they were entering the country. However, during the pandemic, the number of subscribers (people buying SIM cards) declined since there were no longer any tourists to buy them.
When travel returned in 2022, the mobile market got a 3.4% boost. And this, we believe, is just the beginning.
Why Tier 1 Telco will benefit the most
There is a case for each company. Let’s start with Telstra.
Since the Optus breach, people may be more willing to trust Telstra. They have a vast network covering all the places tourists enjoy visiting. They’re also fast, reliable, and have become a well-known brand in Australia.
However, Optus is currently getting some more 5G infrastructure in place. Thus, they will go with Optus if it will give them better 5G coverage than Telstra or Vodafone is going to. So, it could be that tourists would rather have 5G than 4G on their holiday.
And finally, Vodafone. It’s an internationally recognizable brand that almost everyone has heard of. People who use Vodafone in their home country may be more likely to use it when they come to Australia.
Although they are behind the other two with their 5G coverage, one advantage they have is affordability. Some people want the cheapest option that’s good enough. For example, students on a gap year, working-class people, or those who don’t want to spend too much.
Why telcos might not see the tourist boom they’re expecting.
Ten years ago, the most common way to contact someone was via a phone call or text. Today, however, more people use apps such as WhatsApp or social media platforms. These apps are all accessible via wi-fi, provided at most Hotels where tourists stay.
However, the more adventurous tourists might still want a 4/5G connection if they get badly lost or need medical assistance when away from the cities. For example, if someone wants to come over to go camping in the bush.
The return of the tourists will undoubtedly have a net positive impact on the profits of all three telcos. However, the size of this impact will be smaller than it would have done if the pandemic were in 2010.
Conclusion
I am sure your behaviour is reflective of the sort of approach most people take these days. International and roaming calls have become far less reliable revenue streams for telcos than they used to be. Unless it’s a business call, you’re more likely to connect with a friend or relative overseas using Whatsapp or Skype than you are to call them from your standard mobile plan.
That said, international visitors to Australia often pick up a SIM at the airport and use it for their stay. Australia received an almost staggering number of tourist visitors yearly- some estimates suggest 9m in 2019- before COVID hit. As a result, International calls still represent an opportunity for the major phone companies.