VAS is going to be the biggest entity in India: Netxcell

Zeenews Bureau/ Anil Satapathy

Even amid the global economic crisis the telecom industry is going great guns. Beginning with the cellular mobiles revolution, a lot has changed in the telecom sector both for the customers and the service providers. Now a major portion of the telecom companies’ revenue comes from value added services (VAS) provided by them. According to a survey, VAS contributes as much as 10 per cent to the income of the telecom operators. Be it news, cricket alerts, ring tones or caller tunes or any other service, they cost a customer Rs 10-30 per month, adding greatly to the bottomline. In an e-mail interview with Anil Satapathy of Zeenews.com Netxcell Limited CEO Dr Debasis spoke about the emergence of the VAS market and its future. Here are a few excerpts from the interview: What is the current market of VAS in India like? Dr Debasis: VAS market in India is crowded with a lot of players claiming to be offering similar services. While the fact remains that most of these players have not developed products of their own, it is contradictory to what mature markets have to offer since most operators there concentrate on developing products/services themselves rather than trying to just do a commissioning job. We are respected in the industry both within India and abroad for the technological advantage we carry as all the products are self developed. Hence, maturity is still a challenge in the Indian Market while adequate sales/ revenue are still a distant dream. What is its potential? Dr Debasis: VAS is going to be the biggest entity in India, with 10 million new subscribers being added every month primarily from the rural areas of India. Even today, many FMCG companies have started reaching out to their customers through VAS as a medium. Video Streaming/Mobile Advertising/Cell Broadcasting are some of the latest offerings. These products have proved to be successful in the market within India and outside of India based on the research done by us. Netxcell has already deployed some of these in the International Markets and has been rated the best. Once 3G is launched in the market, we will see a lot of products and services being offered which are different from the current situation, and Netxcell is proud to be one of the few players who are completely ready with solutions to face the challenge. Will VAS players survive in a recessionary market? Dr Debasis: VAS Industry during 2007-2008 grew almost at the rate of 40 % YOY. However, during 2008-2009 due to overall economic slowdown the market condition got little bit stiffer. However, VAS companies did not feel that much of a negative pressure because of the terrific acquisition rate of subscribers by the operators. VAS Market is primarily driven by two factors --- a) With the dwindling ARPU; VAS is supposed to contribute that vital bottomline which is about 10 % of topline, b) With the new operators coming in, VAS will be the crucial differentiating factor. The market is predicted to grow at the rate of 40-50 % YOY. How has the delay in 3G impacted VAS providers? Dr Debasis: With the launch of 3G, bandwidth intensive services like Video Streaming etc will be available to customers, who will be able to use the phone for entertainment other than mere voice. VAS revenues are expected to increase as the market will initially react to the launch of these services and may get stagnant after sometime. As far as Netxcell is concerned, we are known for our technological advantage and proactive support for our clients. Since all the products that we have deployed have been developed by us, we are confident of resolving any issues within the least TAT and hence are much more confident of our service support at all times. We are well positioned as a player, who can develop any product in 60 days flat! Has the slowdown impacted (Netxcell’s) business? Dr Debasis: Netxcell has been moving very cautiously in the market, step by step and is not at all affected by the recession. It might be of surprise to many analysts, but Netxcell will achieve a 300 % increase in sales compared to the last FY in this time of recession. What are the most popular services you are providing? Dr Debasis: Netxcell Limited provides innovative and attractive services using SMS, IVR, WAP and GPS. These services are targeted to generate more revenue to the mobile operator by focusing on the current market trends. The company provides SMS information services on mobile like news, business news, stock updates, horoscopes, movie reviews, jokes and downloading of ringtones, picture messages, operator logos, etc. Netxcell was the first to introduce `Cricket on Mobile`, `Advertising on Mobile` and `Exam Results on Mobile` in India and these services are the most popular value added services accessed by the mobile users. After analyzing the Indian Mobile Industry, Netxcell has identified around 100 such SMS information and entertainment services, which we are offering to the mobile operators in different mobile networks in India. What is the future of services providers? Dr Debasis: Great. As of today we have a telephonic penetration of only 30-35% of the population. The remaining 65% is opportunity. Thus the future of service providers (mobile operators) is great. How do you think VAS service providers can add on to the pleasure of using 3G services? Dr Debasis: With the advent of 3G services there will be a big change in the flow of data. Specifically all the audio visual services such as TV streaming will be possible with the adoption of 3G services. At present, when you have 2.5G, you have a not so great user experience. With the advent of 3G you will have fantastic video streaming as there is a much bigger bandwidth. What’s your opinion on the delay in allocating 3G spectrum by the government, how is it going to impact the industry? Dr Debasis: This is an administrative issue governed by DoT and TRAI. Some are even questioning the relevance of 3G services in India, questioning if India is even ready for the services, what do you think? Dr Debasis: With the launch of 3G, bandwidth intensive services like Video Streaming etc will be available for customers and will enhance the overall user experience. More customers will be able to use the phone for entertainment other than mere voice. VAS revenues are expected to increase with the launch of these services as the market will initially react to these services and might be stagnant after a few years ahead. We will see a lot of products and services once 3G is launched and Netxcell is proud to be one of the few players, who are ready with solutions to face the challenge. Netxcell has existing relationships with all Telecom Players in the market and are in the process of signing deals with the New Telecom Players, who have been offered licenses. We will also be launching some new products to cater to the 3G market. Our new products AD axis, Streaming Video Server, ICM and M-infinity are our next gen platforms addressing the growth areas. If you see, all the products are addressed keeping the future in view like Mobile advertisement, which is a huge growth area and with 3G in the anvil, our video streaming server can serve the service providers and media companies.