The rapid rise of embedded SIM (eSIM) technology among overseas travelers is threatening roaming services, a key revenue source for mobile carriers. As travelers learn they can use local data at relatively low prices, many are turning to eSIMs instead of costly roaming.
About 134 million travel eSIMs will be used worldwide this year, market research firm FDM CCS Insight forecast, according to the Financial Times on the 19th. That is up roughly 32% from 101.8 million last year.
An eSIM works by downloading carrier subscription details onto a chip built into a smartphone. Instead of swapping a physical SIM card, users can access a local carrier's data service by scanning a QR code or installing a dedicated app.
For overseas travelers, the biggest draw is that eSIMs cost less than roaming. Travel eSIM providers such as Airalo and Saily offer a range of data plans by country and duration.
The popularity shows up in app downloads. According to market research firm Sensor Tower, the five most popular eSIM apps were downloaded 36.5 million times last year. This year, they have already been downloaded more than 26 million times.
Smartphones Widen eSIM Support as Market Set to Grow Nearly Fivefold
Behind the market's rapid growth is a rise in the number of smartphones that support the technology.
According to the GSMA, more than 326 smartphone models, including Apple's iPhone, supported eSIMs last year, up about 50% from the previous year. As handset makers expand the range of eSIM-capable models, consumers can now use eSIMs without any separate equipment.
The outlook is bright. STL Partners estimated that the travel eSIM market reached 649 million pounds (about 1.23 trillion won) last year. The market is projected to grow to 3.2 billion pounds by 2030.
"The market is moving from a phase of educating customers about eSIMs to converting them into actual buyers," said Vytautas Maknickas, CEO of Saily. "That shift is accelerating."
Budget Carriers and Now eSIMs Rattle Telecoms' High-Margin Roaming
The problem lies with established mobile carriers. Already under pressure from mobile virtual network operators (MVNOs, or budget carriers), they now face a threat to yet another revenue source as overseas travelers choose eSIMs over roaming.
According to FDM CCS, established carriers earn about 3% to 5% of their total revenue from roaming services. Roaming is known to carry relatively high margins compared with other telecom services, prompting analysis that a decline in roaming users could affect carriers' earnings.
"How mobile operators respond to this challenge will determine the scale of revenue exposed to the hit," said Joe Gardiner, an analyst at FDM CCS.
