Innovation and 3G penetration will augment Indian mobile VAS market

Telecom Lead India:
With country’s mobile subscriber base crossing the 900 million mark, industry
experts reckon that mobile VAS is likely to compel the telecom growth in terms
of revenue. 3G will be the main driver for mobile VAS.

Being the world’s largest telecom market after China, Indian
telecom market offers a huge business opportunity for the telecom operators,
aggregators, developers and content providers.

The MVAS market in India is still in nascent stages, and
there is a huge scope for innovation, which will drive the growth in future.

Experts believe that the VAS revenue for operators can
double in the coming years, primarily due to the penetration of data-based
products and services.

As the 3G services penetration in the country
increases and becomes more affordable, the mobile value added services market
in India is expected to rise. The MVAS market of India will also be
complemented by the increase uptake of smartphones and tablets.

As per a report of the Internet and Mobile Association of
India (IAMAI), the mobile VAS market in India has the potential to become an
INR 671 billion market by 2015 contributing to 31 percent of overall wireless
revenues. This growth will be driven mainly by mobile data (both on handsets
and dongles / connected computing devices) contributing 54 percent of the
overall MVAS market by 2015.

“Innovation through collaboration is what the mobile
operators need to realize and they should start opening their network assets
for businesses to exploit to bring the full value of mobile medium for enhanced
productivity, customer engagement and retention. This can unlock the value of
the hitherto dormant assets,” said Vishwanath Alluri, founder, chairman  &
CEO of IMIMobile.

The report further anticipates that the non-voice revenues
will grow to contribute 51 percent to overall incremental wireless revenues in
2015. And to dive this growth, innovation will play a pivotal role.

For Indian MVAS market, mobile banking is one of the
segments with huge potential.

According to a report by KPMG, the Reserve Bank of
India says about 40 percent of the Indian population still lacks access to
formal financial institutions and therefore, is largely unbanked.

Mobile phones have the potential to deliver financial
services to this unbanked population in the form of m-banking. Driven by
progressive banking regulations by the government, m-banking services are
picking up in India, with 707,496 m-banking transactions for Rs 61.61 crore
being reported in February 2011, according to KPMG report.

“Mobile commerce remains a significant long term
opportunity, driven by large Government payouts (through welfare schemes) and
carrier initiatives as carriers increasingly leverage their 2 million+ points
of sale to provide financial inclusion to the unbanked. The total potential
revenue opportunity through mobile commerce can reach INR 20 bn in 2015, and
that is only the beginning,” said Subho Ray, president of Internet And
Mobile Association of India (IAMAI).

In addition to the direct revenue impact, the industry is
also expected to have widespread secondary impact on entrepreneurship and
innovation in India hence mobile Internet adoption will drive the next round of
MVAS business.

Apart from M-commerce, other segments, which includes
delivery of health services, governance, education, agricultural services and
location-based services over the mobile platform will also augment the growth
of MVAS in India.

Whilst MVAS in urban areas will circumvolve around high-end
applications concentrated on information, entertainment and communication, the
growth in rural areas will be impelled through basic or utility-based services
such as m-healthcare, m-governance, m-banking and m-education.

believes that 3G subscription will increase at a rapid pace (30 percent CAGR –
Compound Annual Growth Rate) between 2012 and 2016 to cross the 200-million

Along with 3G services, the number of 3G-enabled mobile
handsets will also continue to grow, reaching an active installed handset base
of 680 million by 2016. Boosted by better handsets and data speed, mobile
value-added services will also boom in the future; Evalueserve expects total
MVAS users to reach 430 million during the period.

Evalueserve anticipated that the rural mobile subscriber
base will grow at a compound annual growth rate of 12 percent between 2012 and
2016, at nearly twice the expected growth rate of the saturated urban market.
It is likely that 62 percent of the new mobile subscribers added in the next
five years will be from the rural market.

By Danish Khan