Telcos continue to worry about losing revenue to chat, voice apps

| | Updated on: Feb 20, 2014
image caption

The whopping $19 billion Facebook will pay to acquire messaging start-up WhatsApp breaks all records in Silicon Valley. The deal has no major implication for the Indian telecom space, but operators here are concerned about the ‘substitution effect’, or losing revenues as subscribers increasingly turn to voice, chat apps such as WhatsApp and Viber.

According to a study by analyst firm Ovum, global telecom companies will lose $386 billion between 2012 and 2018 from customers using over-the-top VoIP (voice over Internet Protocol) solutions such as Skype and Microsoft Lync. These losses will be mostly from international call revenues and roaming services.

“The WhatsApp deal, as such, has no implications for India. We believe WhatsApp is a strongly-engaging platform, and people using these applications stay on the network all the time,” said Gurinder Singh Sandhu, Chief Marketing Officer at Tata TeleServices.

On Thursday, Facebook announced the acquisition of the mobile-messaging start-up, which has more than 450 million users across the world, in a cash and stock deal. According to industry estimates, there are 40 million WhatsApp users and 70 million Facebook users in India, one of the largest markets for both companies.

Even though a mobile connection is necessary to use services that provide free calls and instant messages such as Viber, WhatsApp, Line and WeChat, these applications are eating into operators’ revenues.

“From the business perspective, we don’t see any change as neither Facebook nor WhatsApp has any revenue-sharing arrangement with telecom operators,” said Prasun Kumar, head, brand and marketing at RCom.


“The operators have no control as this is strictly customer behaviour. But there are enough upsides to it and companies need to partner with these application providers and find a way to monetise it,” added Sandhu of Tata TeleServices.

Some have been trying. In December, Tata Teleservices inked a deal with WhatsApp to offer unlimited usage for its subscribers. Earlier in 2012, Reliance Communications launched a ‘WhatsApp Plan’.

In India, as operators have reduced low-cost SMS plans due to regulatory changes, subscribers use other means to communicate, according to a January report by Deloitte Touche Tohmatsu India.

Following the launch of RCom’s ‘WhatsApp Plan’, the number of data customers is likely to increase, said RCom’s Kumar. He added Facebook would now be able to integrate WhatsApp applications on its page. Facebook would also be able to offer contextual messaging on a real-time basis, he said.

Published on February 21, 2014

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like

Recommended for you