March 3, 2014

Whats App Voice Could Hit Indian Telcos Where It Hurts Most

With WhatsApp all set to launch voice services, the Indian telcos would need to do some serious thinking to stay put against a potential OTT threat. The messaging app company has approximately 417 million worldwide out of which 50 million are in India.

In spite of the dramatic growth of data in the last few quarters, voice still contributes around 85 percent of the revenue for Indian telcos. For instance, Bharti Airtel's non-voice revenue constituted around 17 percent of the overall revenues at the end of December 2013. Out of this, messaging forms just about six percent. With the growing popularity of WhatsApp and other applications, this would continue to come down.  

What is further creating problems for telcos is that though the data usage is increasing, data revenue is not witnessing similar growth. Going back to the recently released Airtel results, while data average revenue per user (ARPU) was just Rs 75, voice ARPU was much higher at Rs 161, at the end of December 2013. This is more or less true for other telcos as well. Consequently, this implies that depending on the quality of WhatsApp's voice services, the OTT service has the potential to hit the Indian telcos where it hurts the most.


Now with the backing of Facebook, WhatsApp will definitely be in a position to launch many more products for its subscribers in years to come. The messaging revenue of telcos in India has already started to come down and now with voice also coming under threat, the players would need to do some serious thinking to find a way out of an impending situation. Indian telcos are banking on regulatory support to tackle the problem of OTT players but so far no help has been forthcoming.  

What could be a huge setback for the Indian telcos is that they have only recently spent large sums of moneys to purchase fresh spectrum. The return on this investment will be much slower if OTT players like WhatsApp gain scale. For instance, Bharti Airtel spent another Rs 18,530 crore to buy 900 MHz and 1800 MHz spectrum even though it already had 5 MHz of 3G spectrum for data.

While OTT players have been a regular problem for the service providers across the globe, the voice salvo by WhatsApp might just turn out to be the biggest attack yet. 

So it’s just a wait and watch for the Indian telecom industry for their next move 


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