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Game Changer: Growing focus on VAS applications

May 26, 2014
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According to industry reports, the value-added service (VAS) segment in India is currently estimated at $4 billion and it is expected to witness a compound annual growth rate (CAGR) of 22.13 per cent between 2013 and 2018.

Over the past few years, the increased uptake of smartphones and the roll-out of 3G and 4G services in the country have provided a fillip to the VAS market. Moreover, telecom operators facing challenges in terms of intense competition, achieving cost efficiencies, ensuring revenue growth, building their brand, etc. are tapping the VAS opportunity and have flooded the market with relevant, personalised and content-rich mobile-based services.

For example, Bharti Airtel is offering its prepaid customers free access to Facebook in nine regional languages – Hindi, Bengali, Gujarati, Marathi, Punjabi, Tamil, Telugu, Kannada and Malayalam. The operator has bundled 30 MB of free data usage per month with this VAS.

Usually, around 50 per cent of VAS revenues are generated from SMS-based services. Other revenue sources include services related to the astrology, Bollywood, cricket, devotional, ringtones and interactive voice response (IVR) platforms. However, the focus is shifting to internet and application-based services. According to a recent report released by the Internet and Mobile Association of India, m-entertainment is the largest contributor to operator revenue from mobile VAS (MVAS) and services related to m-health and m-education are expected to witness growth. Moreover, rural MVAS as well as enterprise MVAS have significant potential.

As per a recent report on future telecom trends by Deloitte, India currently has several different information sharing products through which farmers can access information on agricultural best practices, weather and market pricing through SMS, IVR or call centres. Also, various voluntary organisations are working closely with technology companies to develop region-specific and crop-specific solutions and applications to help farmers improve productivity.

Meanwhile, operators have begun focusing on enterprise MVAS, given the saturation in revenues from the consumer MVAS segment following a directive issued by the Telecom Regulatory Authority of India (TRAI). The TRAI directive has made it compulsory for operators to seek permission from subscribers through SMS, email, fax or in writing, within 24 hours of VAS activation, and charge consumers only on their confirmation of subscribing to such services. This has limited expansion in the consumer MVAS segment, forcing operators to explore other areas of revenue generation such as enterprise MVAS.

tele.net examines the initiatives taken by operators in this segment…

Bharti Airtel

The company is focusing on rural customers. Bharti Airtel has signed agreements with various VAS providers for offering applications in local languages and is focusing on the m-commerce market as well. The company’s mobile money initiative – Bharti Airtel Money – has generated a positive response in the 15 countries where it has been launched. This prepaid mobile wallet allows users to make bill payments, book e-tickets, undertake money transfers, etc. through their handsets. The service is emerging as an important tool to financially empower rural customers.

Continuing with its focus on the VAS segment, Airtel recently partnered with Vuclip for its Re 1 Entertainment Store. As per the terms of the partnership, Vuclip is responsible for the analytics and content aggregation engine for the video section of the operator’s Re 1 Entertainment Store.

Vodafone India

The company is betting big on financial inclusion in a bid to tap the country’s large unbanked population (over 50 per cent of the total population), which is evident from the fact that its VAS offerings have been largely focused on the m-commerce space. For instance, a key initiative in the rural space has been the launch of the M-Pesa service (in association with ICICI Bank), which allows Vodafone India’s customers to make cash deposits and withdrawals from the company’s designated outlets as well as cash transfers to any mobile handset or bank account in the country. To enable the service, Vodafone issues a mobile wallet to its customers, which allows them to open a Mobile Money account with ICICI Bank. The service allows customers to shop at select merchant outlets and avail of facilities such as mobile recharge, DTH recharge and utility bill payments. It has formed a similar tie-up with HDFC Bank, under which the operator acts as a business correspondent for the bank. The pilot phase has been initiated in Rajasthan.

A recent offering from the operator’s stable is the Vodafone Music service. Currently, the service is being offered on WAP on Android-based smartphones. The service is available on feature phones and would be extended to other operating platforms in the next few months. Vodafone Music allows users to stream unlimited music and video. Subscribers can download a single song for Rs 3 and download five songs for Rs 10. Further, users can choose from daily, weekly and monthly tariff packs priced at Rs 5, Rs 29 and Rs 99 respectively.


The VAS and enterprise segments are expected to be key focus areas for Reliance Communications (RCOM). RCOM currently serves 45,000 large, medium and small enterprises including 880 of the top 1,000 corporates. Meanwhile, non-voice revenues accounted for over 23 per cent of the company’s overall revenues in the quarter ended December 31, 2013.

The operator recently collaborated with Twitter to launch the Reliance Twitter Access Pack for prepaid GSM subscribers. It provides users unlimited access to Twitter, without any additional data usage charges. This is a promotional offer and is valid for 90 days.


To increase market share and revive operations, the company is focusing on the small and medium enterprise (SME) and VAS segments. The SME market is valued at Rs 105 billion and is expected to increase to Rs 168 billion by 2018, which would open up several opportunities for the company. Tata Teleservices Limited (TTSL) is expected to gain from its extensive network coverage and large number of channel partners across the country.

Meanwhile, the company has launched several VAS offerings over the past few months. It has, for instance, in partnership with Hungama Mobile, launched the Endless Music VAS in Karnataka. The service is available to prepaid GSM subscribers on the electronic voucher distribution platform. Through vouchers priced at Rs 92 and Rs 131, customers can avail of 600 and 1,000 free minutes of music for 30 days and 60 days respectively.


Having established itself as a youth-centric brand, Aircel is focusing on enhancing its VAS portfolio to consolidate its position in the market. To this end, it recently launched a video calling service for 3G subscribers. Users can avail of the video calling facility within Aircel’s network for Rs 1.60 per second. They can avail of free video calling services for 10 minutes and 100 minutes by opting for Aircel’s PI 29 and PI 128 data packs respectively.

Another VAS offering from the operator’s stable is the BookMate e-book store, which allows customers to browse, store, download and read books, magazines and comics on their smartphones, tablets and personal computers. The application is available on the WAP, the internet and Google Play platforms.


Bharat Sanchar Nigam Limited (BSNL) is focusing on the enterprise and VAS business segments. It has launched commercial cloud computing services from its managed cloud platform-hosted internet data centre (IDC) at Ahmedabad. IDCs are also being set up in Mumbai, Faridabad, Jaipur, Ludhiana and Ghaziabad. BSNL earned about Rs 40 billion in revenues from the enterprise segment in 2012-13 and is expecting a growth of 25 per cent in the current fiscal.

The operator has launched video calling services in partnership with ITI Limited and Click Telecom. Users availing of the service are charged Rs 2.50 for a 60-second call. BSNL is also offering users an “unlimited” calling facility for the service, which is valid for 30 days and is priced at Rs 2,200. The other two plans are priced at Rs 750 and Rs 350 and offer subscribers free calls worth 900 minutes and 150 minutes respectively. After the limit, users will be charged Rs 2.50 for each 60-second call. Both these plans are valid for 30 days.


The operator has launched video telephony services on broadband in Delhi and Mumbai in collaboration with Sai Infosystem (India) Limited. Customers can make video calls for Rs 2.50 per minute or can subscribe to Mahanagar Telephone Nigam Limited’s (MTNL) VoIP plans starting from Rs 699 per month with 1,000 free minutes.

Net, net, operators are focusing on their VAS portfolios to enhance their overall market position. However, while analysts agree that 3G and 4G services will provide a fillip to the VAS segment, their provisioning is complex and requires advanced platforms. So, operators must ensure efficient development of the external ecosystem in order to enhance the end-user experience. Ensuring this will depend on the transition from a rigid operator-centric network to a dynamic open market, where revenue sharing models are not skewed towards operators.

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