Global Concerns

In the past few years, the Indian mobile VAS segment has witnessed phenomenal
growth as a result of the booming Indian telecom industry. The telecom
revolution has helped the VAS segment to come out of its infancy and make enough
room for VAS players to expand their horizon in the global markets. Most of the
premier VAS providers are looking at leadership positions in this domain-both in
the domestic and international telecom markets.

The Asia Pacific region and the SAARC countries represent huge opportunities
for VAS players. With the ever-growing subscriber base, and growing popularity
of 3G and other technologies, Asia’s mature telecom markets are ready to adopt
VAS services. In fact, companies are also open for acquisitions and M&A deals,
if this would give them significant market presence.

Markets to Watch out
VAS companies are upbeat about their global expansion, especially in the
SAARC region that is pulling their attention. Rapid growth of telecommunications
and vast growth opportunities in the region are some of the major factors
driving this growth.

After testing the success in the Indian market, One97 Communications is
looking at other SAARC countries for its further expansion. “We are already
working with carriers in Afghanistan, Sri Lanka, Bangladesh, and Bhutan. India
is our core focus and we believe a lot needs to be achieved here. Expansion in
the international market is inevitable. We have people and products in place and
have already started to focus on these markets as well,” says Vineet Kaul,
senior VP, One97 Communications.

Wipro Infotech is looking for expansion in Bangladesh and Sri Lanka, as well
as in Africa. On the other side, the Asia Pacific region represents one of the
largest opportunities for Dialogic.

Another VAS player, Utiba has its customer base spread across three different
continents and all of them are in developing economies. According to Ritesh
Andley, director, product marketing, Utiba, “We find huge potential for our
products in the Asian, African and Latin American markets, and we are successful
in acquiring customers in all these geographies. However, majority of our
customers are in Southeast Asia or SAARC countries.”

Apart from its association with Bharti Airtel and other new players in the
Indian market, Utiba has also tied up with Mobilink in Pakistan. Mobilink is
using Utiba’s platform and the company has also entered into a joint venture
called U:Gen in Sri Lanka to offer mobile commerce. Utiba has also been
associated with Citycell in Bangladesh, and soon it will be able to announce
another important association in Bangladesh. Bangladesh and Pakistan are
potential markets for Utiba.

Facing Challenges
Different markets are different in their niche requirements. This can vary
from one country to another, even if they belong to the same region. More
importantly, it’s the regulator in each country which is making the rules of
engagement different. Speaking on the major challenges associated with entry in
the global market, Kaul of One97 Communications says, “For doing business in
international markets, the most important aspect is the product line-does it fit
the target market, localization effort, support, etc. In case most of these are
in place, it becomes more manageable to target carriers and engaging them.”

Local content and rights related issues are some of the major bottlenecks VAS
companies are facing in the international market.

According to Eamon Kerns, VP, sales, Asia Pacific, Dialogic, “In markets like
India, currently 3G is a major issue. India is one of the largest telecom
markets. Thus, it is very important for us that the 3G spectrum is made
available in India. Moreover, Indian operators need to understand how they can
make money from video services.”

Different Shades
Demand depends upon the kind of product being sold, the kind of markets that
are being targeted, and the customer profile of the carriers. Commenting on the
demands in different markets, Andley says, “Huge geographic distances,
inaccessible terrains, wide demographic differences, multiple language spoken in
a single country are the factors which make each country different, and the
product has to be flexible enough to cater to the dynamics that will emerge out
of such a situation.”

All emerging markets are predominantly prepaid, more or less in the same age
of evolution as the Indian market, or even a few steps behind. So, VAS players
are facing similar demands in emerging markets as in India.

Talking about the demands, Emon Kerns, VP, sales, Asia Pacific, Dialogic
says, “The Indian market holds greater potential to adopt new technologies,
especially in the mobility space since there are almost thirteen operators in
India which make the Indian telecom market more competitive. Competition drives
innovation and that’s why technology adoption is very rapid here. But this is
not in the case of China as there are only four operators.”

New Business Models
The range of business models include-license purchase model, revenue share
model, managed service model, or completely white labeled service model. All
these are very common with different players in all geographies, including
India. “A majority of VAS services today are being launched in the revenue share
model between network operators and content/application providers. We see this
same revenue share model deployed both in India and other Asia Pacific
countries,” says Kerns. Most of the countries use very similar business models
as that of India. And it’s always great to figure out a new business model and
make it work.

Global Plans

One 97 Communications is very actively looking at the global market,
especially at countries in the SAARC region. Talking about the company’s global
plans Kaul says, “We have been focused on India since our inception. Off late,
we have started to explore global opportunities. Currently, in terms of
customers, we are working with Citycell in Bangladesh, Roshan in Afghanistan,
etc, and also looking at most of the emerging markets. We have already connected
with many carriers in the emerging markets and have seen positive traction.
Among the SAARC countries, we are currently working in Bangladesh, Bhutan and
Sri Lanka.”

“Currently we are looking at markets outside India as extension of territory
for our existing products. Investments are being made in terms of having teams
in place who go out and connect with customers. However, we are open to
opportunities where an acquisition can give us significant market presence,”
Kaul further adds.

Commenting on the same, Viswanathan Ramaswamy, GM, network and managed
services, telecom verticals, Wipro Infotech says, “We are a service integrator
and we focus on VAS managed service offerings. We are presently concentrating
primarily in India and the Middle East markets. We are investing in integration
and management frameworks for multi-vendor VAS. We also have invested in SDP and
mash-up applications for helping service providers to monetize the investments
that they have made in the VAS platform.”

Technology adoption is very rapid in India, but this is not
in the case in China

Emon Kerns, VP, sales, Asia Pacific, Dialogic

We find huge potential for our kind of products in the
Asian, African, and Latin American market

Ritesh Andley, director,product marketing, Utiba

We will expand to Bangladesh and Sri Lanka in the near

Viswanathan Ramaswamy, GM, network and managed
services, telecom verticals, Wipro Infotech

We are very aggressive in India, Pakistan, and Bangladesh

Arvind Rao, CEO, OnMobile

We are already working with carriers in Afghanistan, Sri
Lanka, Bangladesh, and Bhutan

Vineet Kaul, senior VP, One97Communications

Praveen Rajpal, CEO, Handygo says, “By the end of 2010, we have plans to
enter countries like Africa, Bangladesh, etc, as we are working on an ‘universal
model’ which gets acceptable everywhere. This working model makes our entry

Another major VAS player, Comviva is also eying the top slot in the global
market. The company is presently working with over 100 mobile operators
worldwide. The company’s emerging presence on the global map was evident from
the break-up of its revenues, with as much as 65% of its gross revenue coming
from its international business.

One area of significant growth is the rural segment, particularly in markets
like India, Africa and Indo-China, where low literacy levels and language
diversity present unique challenges to telecom operators. Comviva’s footprint
covers nearly all major global markets and the company is ramping up its
operations in new markets like Southeast Asia and Latin America. Operations are
being opened in Johannesburg, Nairobi, Accra, and Ciaro in this fiscal.

Leading VAS player, OnMobile, is very bullish in the markets of India,
Pakistan, and Bangladesh, as far as SAARC countries are concerned. Commenting on
the same Arvind Rao, CEO, OnMobile says, “On the global front, the company
already has its presence in thirteen countries of Asia Pacific, the Middle East,
and Africa, and around eight to ten countries in Europe and North America. We
are entering these emerging markets through global deals with large
conglomerates, like Vodafone Global and Telefonica.”

With aggressive expansion and investment plans, VAS players have pulled up
their socks to tap the global markets. VAS companies are spreading their wings
and optimizing their strength and strategies to grab a share in the global pie.
The global markets have advantages like crucial growth, new and advanced
technologies, learning and innovation, and bigger and more profitable markets.

Arpita Prem

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