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Mobile vas in emerging markets 11 2-11

This document discusses mobile value-added services (MVAS) markets in India and Egypt. It provides an overview of the MVAS market definitions and product segmentation. It then discusses the key drivers for growth in these markets, including the explosive growth in mobile subscribers in both countries. The document also summarizes the scope of the study and provides high-level overviews of the MVAS market drivers and restraints in India and Egypt.

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Mobile VAS in Emerging Markets - India and Egypt Aandal Margabanthu Information & Communication Technologies 2,November 2011 Frost & Sullivan’s Growth Consulting can assist with your growth strategies
Today’s Presenters Aandal Margabanthu, Research Associate, Information & Communication Technologies, Frost & Sullivan 2
Focus Points Agenda Introduction Market Definitions and Product Segmentation Why MVAS? Explosive Growth in Mobile Subscribers Scope of the Study Drivers and Restraints for Mobile VAS Market India VAS Market Egypt VAS Market Increasing VAS Penetration Growth in VAS Revenues Analysis of Popular VAS Segments Prevalent Business Models Revenue Sharing Model New Opportunities Strategic Conclusions 3
Introduction 4
Market Definition and Product Segmentation Mobile Value Added Services as those services that offer differentiation for operators and also allows them to charge a premium price. It includes Non voice services such as SMS ( P2P,P2A etc), MMS, RBT , data services like the ones using GPRS, WLAN, 3G etc and other WAP,IVR,IVVR and USSD based services. Product Segmentation Value Added Services Messaging Non SMS Services (P2P/P2A/A2P) Ring Back Data Voice/IVR Video/USSD Tones Services /etc 5
Why MVAS? Falling Voice ARPU Proliferation and reducing of Smartphone operator’s margins and Smart devices Explosive Evolving growth of end user Mobile Subscribers preferences Importance of MVAS Mobile phone has transcended from simple communication tool to an all-powerful infotainment and utility tool Mobile operators are shifting from Voice to Value Added and Data Services 6
Explosive Growth in the Wireless Subscribers Mobile Subscribe rs Grow th CAGR (Egypt): 5.31% 2000 CAGR (India): 8.9% 1467.5 1500 s ) Sbci e ( n us rbr m 822.9 1000 500 0 2010 2017 Source : Frost & Sullivan India Egypt • The Indian and Egyptian markets have been witnessing an explosive growth in the subscriber base in the recent years due to increased affordability and innovative and price competitive services offered • Another reason is the availability of cheap handsets with enhanced features like 3G support etc • Voice services still corresponds to about 80% of the operators revenues but there is an increase in data usage in India and Egypt • The ARPU will continue to decline in the both the countries 7
Scope of the Study The study provides comprehensive insights into the emerging Mobile VAS markets of India and Egypt. It includes detailed analyses on the following • Growth in the Wireless Market with Subscriber, ARPU and Revenue Forecasts • Key Trends, Drivers and Restraints for the MVAS Market • VAS subscribers, penetration, ARPU and Revenue • Analysis of Value Added Services (Messaging, Premium Content, RBT, Data etc) and VAS platforms (SMS, IVR, WAP etc) including forecasts and revenues • Distribution and Revenue Share Models • New Opportunities in VAS • Competitive Intelligence including market share by operators and key vendor profiling 8
Drivers and Restraints for the Mobile VAS Market 9
India VAS Market MVAS Market: Key Market Drivers and Restraints (India), 2010-2017 1-2 years 3-5 years 5-7 years Availability of feature rich Smartphones and feature phones at an affordable price range High High High Market Drivers Launch of 3G services in late 2010 and impending Medium High High launch of LTE in 2012 will increase the data usage Availability of customer centric, vernacular Medium Medium High information that can cater to the needs of all segments Medium Medium Medium Differentiation and Revenue Generation tool for Operators Medium Medium Medium Regulatory Constraints for enabling VAS Market Restraints Lack of transparent VAS pricing scheme High Medium Medium High High Medium Underdeveloped mobile internet ecosystem with irregularities in connectivity ,billing etc Source: Frost & Sullivan analysis 10
Egypt VAS Market MVAS Market: Key Market Drivers and Restraints (Egypt), 2010-2017 1-2 years 3-4 years 5-7 years Relaxation in Government Regulations Medium High High Market Drivers Availability of high speed data services at affordable prices Medium High High Increased Availability of innovative Apps Medium High Medium and Services in the market Differentiation and revenue generation Low Medium High tool for operators amid declining voice revenues Unstable Socio Economic Scenario in High Medium Low the country Market Restraints Poor Smartphone penetration owing high High Medium Low pricing and low disposable income levels High Pricing of VAS services High Medium Low Lack of Awareness among end users about VAS Medium Low Low services available in the market Absence of a transparent revenue sharing model between Medium Low Low service providers and VAS vendors Source: Frost & Sullivan analysis 11
Increasing VAS penetration The VAS subscribers in India and Egypt are likely to increase at a CAGR of 14.5% to reach 865.54 million by 2017, a majority of whom will be from India VAS penetration in India as of June 2011 was 52.5% of the actual subscribers VAS penetration in India is likely to reach 85% of the actual subscribers by end of CY 2017 Egypt had a VAS penetration of 77% as of June 2011 VAS penetration in Egypt is likely to reach 92% by Dec 2017 Note: Actual subscribers are calculated after reducing the number of multi SIM subscribers. Active subscribers are the total number of VLR subscribers 12
Growth in VAS Revenues VAS Re ve nue s 3.8 35 Rv n e ( S b l o ) e e u sU D i i n 30 l 25 20 15 28 10 0.53 5 2.67 0 2010 2017 Source : Frost & Sullivan India Egypt • VAS and Data will become a USD 28 billion industry in India by 2017 • Egyptian VAS revenues are likely to reach USD 3.8 billion by 2017 • VAS and Data will contribute to more than 50% of the overall operator’s revenues in both the countries 13
Analysis of Popular VAS Segments SMS(P2P) • P2P SMS in India had an actual subscriber penetration of 50% in 2010 and contributed to about 30% of the overall VAS revenues • As of June 2011, more than 50% of the overall wireless subscribers in Egypt used P2P SMS CRBT • In India CRBT had a penetration of 30% in 2010 and it contributed to 23% of the overall VAS revenues • Around 29% of the overall wireless subscribers used RBT and CRBT as of June 2011 in Egypt Premium Content and Services • 20% of the actual subscribers in India use Premium content including ring tones, music downloads, games, premium SMS, contents etc as of 2010 • Around 24% of the overall subscribers as of June 2011 used premium content and services in Egypt Mobile Broadband • Mobile Broadband will be preferred broadband access technology in both the countries • In India the number of end users using mobile broadband on handsets is slated to increase at a CAGR of 93%(2010- 2017) • Wireless broadband adoption in Egypt is slated to increase at a CAGR of 17.2%(2010-2017) 14
Prevalent Business Models Off Deck(D2C) Handset (Mobile Broadband) Manufacturer On Deck Content Technology Content Owner Operators End Users Aggregator Enabler Off Deck(D2C) (Mobile Broadband/ Retail outlets) Operator based or On Deck model is the most common business model in these countries. Off Deck or Direct to Customer model has not gained much popularity or adoption 15
Revenue Sharing Model India Egypt Content Owner • Content Owner retains 5- 10% of revenue • Presently there is no • Content Aggregator retains transparent revenue Sharing Content Aggregator 10-15% revenue model between Operators and • Technology enabler VAS Vendors in Egypt. (Managed VAS Vendor) Technology Enabler • Operator’s share of revenue Retains 10-20 % of (Service Delivery Platform Provider) ranges between 50% and 70% Revenue while rest of the revenue is • Mobile operator gets the shared between content rest of revenue i.e. around Network Operator 60-80 % provider, content aggregator and technology enabler End User 16
New Opportunities Mobile Broadband Applications • VoIP • Video application including video on demand and live TV • Social Networking apps including multi- user gaming etc Utility Applications Transactional and Commerce • Mobile Health Application • Mobile Education • Mobile Banking: A precursor to financial Future VAS • Mobile Agriculture inclusion Offerings • Mobile Governance • Mobile Commerce (SMS/USSD/WAP) • Disaster management/alerts • NFC related mobile payments and • Emergency alerts transaction Location Based applications • Navigation application • Fleet/Work Force Tracker • Location based advertisements/alerts/information including weather/traffic updates Source : Frost & Sullivan • Location based coupons and deals from operators/vendors 17
Strategic Conclusions 18
Key Takeaways (India) Increasing Smartphone penetration and 1 usage of data services on the mobile will drive the VAS market ahead Top VAS revenue grossers like SMS and 2 CRBT will be replaced by other services like data etc in the study period The focus of the operators will move from voice to data in the near future. VAS will be a 3 revenue generation and brand differentiation tool Increasing focus on m-commerce, utility application like m-Health, m- Education etc 4 will help in achieving inclusive growth in the country Mobile broadband and adoption of off deck 5 vale added services will bring forth a revised and equitable revenue share model 19
Key Takeaways (Egypt) Growing wireless market represents a huge 1 opportunity for VAS players in Egypt High literacy rate of the target population will 2 help in industry growth Operators are focusing on increasing 3 strategic alliances with ISPs, banks, vendors and global platform providers 3G infrastructure upgrades and increased affordability due to subsequent price 4 rationing provide great growth opportunities for VAS in the country Key to the success lies in providing 5 innovative utility services at attractive prices 20
Next Steps Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) +91 (0) 22 6160 6666 Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 21
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For Additional Information Caroline Lewis Aandal Margabanthu Corporate Communications Research Associate 91.022.6607 2000 Information & Communication Caroline.lewis@frost.com Technology Practice AandalM@frost.com Abhishek Chauhan Deepshri Iyer Senior Consultant Corporate Communications Information & Communication 91.022.6607 2000 Technology Practice deepshrii@frost.com abhishekc1@frost.com 24