Idea Cellular MD Himanshu Kapania said on the company’s Q1-FY15 earnings conference call that OTT apps like Viber have had some impact on their International calling business, but on regular voice calls, there is no impact yet. Kapania was responding to a question on the impact of OTT apps like Viber on the voice business.
Idea reported 27.9 million mobile data subscriptions for the quarter ended June 30, 2014, registering a 10.5% growth from 25.26 million mobile data subscriptions in the previous quarter. Mobile Internet services are 8.7% of service revenue for the company. It reported a blended Data ARPU of Rs 55 per data connection, and Rs 116 of 3G data ARPU per 3G connection. 3G usage was Rs 429 per 3G connection during the quarter. More details here.
Kapania believes that the impact on voice services will be negligible because of two reasons: firstly, India has the lowest voice calling rates in the world, and secondly, Mobile Internet penetration is only around 20%.
“Globally, you are right, it has had an initial impact on SMS services, and how it has started to have an impact on voice services. The reason, in India, it is expected to have an impact that is far lower than what impact you see in Europe, is because India, currently is on 2G, and has the lowest rate. We are running at the rate of Rs 0.35 to 0.40 realised rate. And even as we speak, only 20% of consumers are using data, and 80% prefer to use only voice. So, our belief is that there will be some cannibalisation, but we don’t feel that there is significant enough cannibalisation for us to cry foul. We believe that the bigger cannibalisation is on International calling, where the rates are higher and to some degree on NLD, but on voice calls, there is far lower cannibalisation”, Kapania said on the call.
Then why is the COAI complaining?
Note that while Idea Cellular isn’t crying foul yet, the COAI, a telecom lobbying association of which it is a significant member, has placed on it’s wishlist for the Indian government: “a revenue sharing arrangement between the over-the-top service providers and telecom service providers,” adding that “COAI Members believe there is a crucial need to initiate dialogue and work with the Government of India on this issue”. At the time that that statement was made, Kapania was the Chairman of the COAI.
Perhaps it is more in anticipation of a problem. Readers should keep in mind that SMS revenues have been hit significantly by Whatsapp and similar services. Idea Cellular, in its earnings report for the quarter ending June 30th 2013, has said that its “non-data mobile VAS revenues” are under pressure from the “threat emerging from free messenger & chat ‘OTT’ applications/services”, apart from the TRAI’s double confirmation regime, which is impacting all telecom companies, and had led to them increasing rates for VAS and also mobile data.