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eSIMs have opened up the roaming market to new competition. However, mobile operators are well-placed to respond.

Since it arrived nearly 20 years ago, the smartphone has virtualised a range of physical ‘things’. Camera, desk diary, alarm clock, map, music player – these consumer products have all become icons on a screen.

Now even the phone's removable SIM card is going the same way.

The SIM is the building block of cellular connectivity. It stores the international mobile subscriber identity (IMSI) number and its related keys. In short, mobile network operators (MNOs) use the SIM to identify a user to the cellular network. 

Since the first SIM launched in 1991, the form factor has been physical – a plastic card that users can swap out every time they upgrade their phone.

The big change came in 2016, with the arrival of the embedded SIM. The eSIM is soldered inside the mobile device, and comprises an Embedded Universal Integrated Circuit Card (eUICC) that can house multiple SIM profiles containing operator and subscriber data. The users can change their subscription via an app or QR code scan.

At launch, there was much discussion about the long-term impact of eSIM. How would making it easier to switch networks change the role of the MNOs? Would it damage them – or present new opportunities?

Nine years later, the biggest impact of consumer eSIMs on MNOs has been in the travel/roaming market.

It’s easy to see why. Changing an eSIM profile when travelling abroad is often cheaper than roaming – and less complicated than buying, inserting and setting up a local SIM card. Indeed, according to Juniper Research, the number of travel eSIM users is set to grow from 40 million in 2024 to more than 215 million by 2028.

eSIM – the origin story

To understand the impact of eSIM, let’s review its beginnings. The eSIM/eUICC was introduced primarily to support the Internet of Things (IoT) market. Changing an IoT subscription is challenging, especially when the device is located in a hard-to-reach spot. There is no human ‘user’ to swap out the SIM card. With eSIM, a manufacturer can solder a UICC into a device at the factory. The subscription can be configured over the air later.

However, it soon became apparent that eSIM had potential in the consumer market too. Google launched its first eSIM-compatible handheld device, the Pixel 2, in 2017. The following year, Apple supported eSIM for iPhones. According to GSMA Intelligence, there are now more than 271 eSIM enabled consumer devices available. Analysts believe that 56 percent of smartphones will be eSIM enabled by 2028.

Why travel is ripe for eSIM disruption

Market watchers agree that travel is the hottest space for eSIM. Kaleido Intelligence expects travel eSIM spend to rise 500 percent between 2023 and 2028 to reach $10 billion.

There are four compelling reasons why. 

The first is cost. Roaming fees can be prohibitive for consumers used to buying inexpensive data at home. The travel eSIM offers a cheaper alternative. According to Juniper, subscribers spend an average of $8.57 per GB of data when roaming, compared to $5.50 per GB on travel eSIM. 

The second reason is certainty. With a travel eSIM, the consumer knows the cost in advance. There’s no ‘bill shock’ at the end of the month.

Reason number three is continuity. Subscribers can buy connectivity at home or abroad using their normal number. This is not possible when using a removable roaming SIM.

Finally, there’s convenience. A user with an eSIM-capable phone can activate a new subscription via methods such as clicking on an app menu or scanning a QR code.
 

The future: can MNOs adapt and win?

Roaming has been a profit centre for MNOs since the 1990s. But now eSIM looks set to be the new standard for connectivity. So the question is: can operators turn disruption into opportunity? Many believe they can. Why? Because MNOs have strong in-built advantages over new market players such as:

Brand trust
Consumers are often nervous when buying connectivity abroad. An MNO’s brand can be reassuring here.

Existing partnerships with global MNOs 
MNOs already have roaming agreements in place. They can harness these partnerships to create new value-for-money eSIM offers.

Advertising
MNOs have the budgets and the experience to create effective eSIM awareness campaigns.

Local offers and promotions
MNOs are well placed to create partnerships with local experiences (attractions, taxis etc.) to deliver new revenue and provide added value for consumers.

Local customer support
Consumers with issues can seek support via an MNO’s (or partner MNO’s) local store network. 

Voice and SMS provision
Only MNOs can offer cellular services such as voice and SMS on top of data. This can be useful for travellers – especially in countries where messaging apps or Voice over IP are restricted.

Compliance with local regulations
Providers must abide by regulation such as eKYC verification, which is required to start a subscription for some countries. MNOs have the know-how to handle this complexity.

The above advantages put MNOs in a strong position to create packages that monetise inbound and outbound travellers, and also cater for ‘silent roamers’ who switch off data entirely when travelling. Indeed, many MNOs are already active in the space. Bouygues Telecom’s B&YOU Summer Edition works in 112 destinations, Orange Flex covers over 200 countries while Vodafone's Travel eSIM service works across 700 networks worldwide.

MNO options in the travel eSIM market: build, partner or buy?

Once an MNO decides to launch a travel eSIM white label/web portal solution, it has three options. The first is to build its own unique offering. Going it alone enables an MNO to sync with its existing systems. But it is expensive, time-consuming and limits the MNO’s ability to react to market changes. 

Another option is to partner with a travel eSIM provider. This is the quickest route to market. However, it surrenders control to a third party and locks in connectivity to one provider.

Many MNOs now choose the third option: buy. Purchasing a white-label platform such as Thales Travel Connect offers total ownership, fast time to market and built-in support for distribution partners. It does, of course, require some upfront investment. 

Conclusion
Eight years ago, when the consumer eSIM was launched, observers wondered which market it would disrupt the most. Today, the answer is obvious: roaming. Millions of travellers are moving to the cheap and convenient eSIM option.

But MNOs need not be sidelined. They have many in-built advantages over new entrants. And thanks to specialist white label partners they can create their own omnichannel travel eSIM offers quickly. 

For MNOs looking to move fast and compete smartly, partners such Thales offer proven platforms to unlock this opportunity — quickly, securely, and at scale.