Two of the telcos, Idea Cellular and Uninor, recently announced their quarterly results. Both of them posted strong revenue growth. Significantly, the contribution to growth came both from voice as well as data businesses.
The results underscore a fact that while data is the new growth engine for telcos, voice is not retiring anytime soon. And while the over-the-top (OTT) providers very much pose a threat, it need not be of a life threatening genre.
In fact, pricing power has come back somewhat to operators, as evidenced in the Idea and Uninor results too. While Idea Cellular reported a 57 percent rise in quarterly profit, partly on the back of higher call rates, Uninor also reported a 46 percent improvement in gross revenues for its second-quarter results released a day ago.
Other operators, including Bharti Airtel and Reliance Communications, would be announcing their first-quarter results for FY 2014-15 in the coming days and it would interesting to see if an industry-wide trend emerges in voice revenue growth.
India’s still low voice tariffs seem to be working to telcos’ advantage as there’s hardly a benefit for users in switching to OTT voice apps for local and national calling. However, the international calling is a sizable area of opportunity, especially for the larger incumbents that also have a combination of fixed line businesses and strong enterprise play.
That explains why Idea, despite being India’s third-largest mobile service provider, doesn’t seem to be much bothered. On the other hand, incumbents like BSNL and Bharti Airtel would be concerned.
Not surprisingly, Airtel happens to the first (and only Indian operator) to have entered a strategic tie-up with Viber, to the extent of offering a Viber Out service with operator billing support. The arrangement is a win-win for both the parties, as it helps ensure that Airtel doesn’t lose a customer to a competition (telco or OTT) while Viber gets to gain an active subscriber base that could be further monetized for its other offerings like stickers.
Likewise, Airtel is also having another OTT tie-up with instant messaging app WhatsApp, which helps it offset some of its SMS revenue being lost.
Going forward, it would be logical to see more such tie-ups taking place.

This article first appeared in Light Reading India.

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