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In a surprising turn of events, Canada’s leading telecommunications companies are reporting a significant decrease in revenue from international roaming services. This decline comes as fewer Canadians are making trips to the United States, a trend that has been exacerbated by ongoing trade tensions and economic uncertainties.
The implications of this shift are profound, not just for the telecom industry but also for the broader economy.
Declining travel trends impact telecom revenues
During a recent telecom and media conference, Bell Canada’s CEO, Mirko Bibic, revealed that the company has experienced a roughly 10% drop in international roaming revenue in the first quarter of the year.
This downturn is expected to persist, particularly as travel to the U.S. remains subdued. Bibic noted that March was particularly hard-hit, indicating a broader trend of reduced travel among Canadians. With international roaming accounting for about 4% of BCE Inc.’s average revenue per user, this decline could have significant repercussions for the company’s financial health.
Statistics reveal a stark decrease in U.S. visits
Statistics Canada has corroborated these findings, reporting a notable decrease in Canadian visits to the U.S. over recent months. Factors contributing to this decline include rising tensions over tariffs and concerns regarding treatment at the border.
For instance, in April, the number of Canadians returning home by car from the U.S. plummeted by 35% compared to the previous year, marking the fourth consecutive month of year-over-year declines. Air travel has also seen a nearly 20% drop, further underscoring the impact of these economic and political factors on travel behavior.
Telecom executives weigh in on future travel trends
Executives from other major telecom companies, such as Telus and Rogers Communications, echoed Bibic’s sentiments. Telus CFO Doug French reported a “significant decline” in U.S. roaming revenue, particularly during March break, and expressed concerns that this trend may continue until relations between Canada and the U.S.
improve. Meanwhile, Rogers CFO Glenn Brandt noted that about 15% of the drop in the company’s average revenue per user last quarter was attributed to decreased roaming activity. Brandt remains cautiously optimistic about a potential uptick in travel during the summer months, although he acknowledged a shift in travel patterns towards Europe and other destinations.
As the telecom industry grapples with these challenges, the broader economic landscape remains uncertain. While some executives claim that the impact of economic uncertainty has been minimal thus far, they are closely monitoring consumer confidence and spending patterns. The hope is that as political tensions ease and travel resumes, the telecom sector will rebound, restoring revenue streams that have been adversely affected by these recent trends.
