Almost all the Telecom Carriers in the country have already matched each other on technology, prices, services and offerings. Now, how do you think these guys are going to differentiate themselves and stand out as a brand? Consider this - Per the very latest filing by TRAI, total wireless subscription in India has reached 540 million. With this, the overall tele density in India has reached around 47%. The Metro and Urban market is already saturated and the additions are mostly from the low income groups. In such a scenario, how do you think revenues of Telecom players can grow?
Think about this - The Average Revenue Per User (ARPU) is on a constant decline. At the end of March 2006, the ARPU among GSM users stood at Rs. 366 and for CDMA users, it was around Rs. 256. Now, after almost 4 years, the ARPU of GSM users stand at around Rs. 200 and for CDMA users, it is less than Rs. 90. Even more, Cellular majors in the country have already started dumping metrics like ARPU to measure their performance and are moving towards the conventional metrics like Sales, net earnings, margins. With an already saturated telecom market and with constantly falling ARPU s, from do you think the growth is going to come from?
The answer lies in providing unique and innovative value added services.
Mobile VAS as a part of ARPU has been contributing for about 8% in the recent years. However, there is a clear shift that is evident and it currently stands at around 10%. This is expected to rise further and reach say around 20% of ARPU in another 2 to 3 years, considering the current benchmarks.
Mobile VAS in India is already more than a billion USD business and is expected to touch a turnover of around 20,000 crore by the year 2013. The Mobile VAS as a segment is growing at healthy rates of around 40% to 50% and the industry leaders are even doubling their revenues every year.
Unlike in the improvised world where a cell phone can be easily used as a Debit/Credit Card using VAS applications, such services has so far remained only a dream in India due to the strictures imposed by TRAI and Reserve Bank of India. The 3G services have just started and a review of restrictions by TRAI is expected which can lead to a host of new VAS services. VAS in India will continue to grow due to factors like increase in awareness of VAS, increased subscriber base, introduction of 3G services and increased focus on m-Commerce.
The 10in3 for this month from HBJ Capital is the best possible play available to play the mobile VAS future in India. If you were to think that we have picked Onmobile Global, you should probably re think :). We are not here to tell something which everybody knows and which everybody tells you.
Arun Gopalan $ Lead - HBJ Capital Service Pvt Ltd,
Arun@hbjcapital.com
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