wordpress blog stats
Connect with us

Hi, what are you looking for?

One97 Communications On Voice Service Dependency, Content Arbitrage Model, Low VAS ARPU And “Dakia”

One opinion held about One97 Communications is that they have a significant dependancy on voice based services. The Mobile VAS company announced a fund raising from Intel Capital and Silicon Valley Bank. One97 Communications competes with the likes of OnMobile Global, Bharti Telesoft, Cellebrum, IMI Mobile and ValueFirst. In Part 2 of this two part interview (click here for Part 1), we spoke to Vijay Shekhar Sharma, MD of One97 Communications about how are they impacted if rates for voice based services go down from Rs. 6/min, their dependancy on new products and services, Rural services and whether the VAS business is limited by the amount pre-paid consumers can set aside for VAS.

Dependancy On Voice Services 

How dependent are you on voice based services?
Voice based applications contribute around 37-38% of revenues, and that is the largest contributor. We have SMS subscriptions with around 20 million active customers paying Rs. 30 per month to operators. Our dependency on any single application is quite low.

We’ve invested a significant amount in applications for 3G and video. We have an R&D setup. We are going to invest in people for network technologies like WiMax. These will bring a new kind of customer requirement – devices bought for bandwidth. Today we buy a phone and bandwidth is a value add. Tomorrow, we will buy bandwidth and voice will be a value add. We will deliver half a billion SMS in a month. If I have 20 million subscriptions – that 600 million SMS in a month. Who says we are married to voice? We are about a telecom platform.

New Products And Rural Services

Advertisement. Scroll to continue reading.

What is the breakup of revenues between new products and old products?
Year on year, we’ve seen the flavour of the year go from virtually nothing to 35-40% revenue. We see the rest of the applications also growing. The very reason for our growth has been that we’ve been able to launch innovative applications time and time again.

So a significant amount of growth depends on new products…which are the key products that you have launched?
We have our go-to-market application tools which operators use. Content is one big application for us – we do royalty free content, which is 15-20% of our revenue. Applications like user generated and community applications that we do for the rural market. We have an application called Dakiya (Ed: Hindi for postman).  You can’t sell SMS in the rural market – even Hindi is non-native. You have to have a vernacular application, and vernacular in text does not exist. I don’t think Rural VAS is limited to Mandi Rates. We built up a community of villagers, where a few are authorized to pass the messages. Rural requires rural content, which we sitting here cannot generate. A sarpanch (village head) will publish a message in their local language, and it gets broadcast to the group. This is on voice – so it breaks across the barrier of SMS. We’ve seen a couple of thousand messages a month from a village, like information on power cuts, crop information, local initiatives. It is democratization of content.

How much does this cost Rural Consumers?
Interestingly, a consumer doesn’t have to pay anything, because it is included in their monthly rental. These are the kind of applications that work for the masses.


Your plans for 3G?
There will be video from the operator side. But always remember that everythng has to squeeze into the Rs. 20 that the users will spend. It does not mean that users will end up spending another Rs. 10 because we get video tomorrow. This is more important than a new gizmo. It’s not about the race for new applications. If I launch Video, it will never be 30% in the first year. It will take time to penetrate to my user base.

State of the Mobile VAS business

Advertisement. Scroll to continue reading.

Have we reached a situation of saturation in case of VAS? Consumers don’t have more than Rs. 40 spend on VAS.
If you look at premium services for long tail users – they give a lot of volume, but for affordable services. Dakia doesn’t have any premium attached to it. Rs. 6/min rate on voice has to go anyway. We say that give Rs. 30 per month, and use it as much as you want.

Won’t it hurt you if the rate for Voice Services declines from Rs. 6/min?
It won’t because a Rs. 6/min customer pays only about Rs. 24/month anyway. So if a consumer pays Rs. 30, my average customer realization goes up in ARPU terms. I am completely against free: Rs. 1 per minute is a good number.

Has the VAS ARPU been declining in the last 3 months?
There are two factors – one is new customers. These give ARPUs of less than Rs. 100, and can spare around Rs. 10 on VAS, but these are in the millions. It is growing as an absolute figure. The third reason is that a customer who comes on the network, is not used to the phone. He is ready for VAS after 5-6 months. Those customers who have been on the network for a year are ready for VAS. When we have 400-500 million users on the network, it will take a year to see the full value of the VAS business. Operators don’t need to deploy SMSC – instead of buying an SMSC, he takes it from us on a pay-per-SMS basis. This is why we are able to show the numbers – it’s not just a content play.

Have the operator deployments slowed down over the last 6 months?
No, the fact is that they are making incremental enhancements on the platforms.

Have you looked at the content business model around music?
At one point in time, we were doing music based applications. That time, the royalty model had not been settled. Today, there are two models – you take the content and become the royalty collector, where there is only an arbitrage resale value. The second, where we are, is becoming the platform where the content transactions happen. We believe content will be of many kinds – branded, unbranded, user generated, community generated…content is a business where we will have a platform role.

What about expanded doing what others (Ed: OnMobile) have done – expanded their margins by also licensing content?
We don’t think there is value for us – the ecosystem already exists. We don’t understand this business of giving minimum commitment and try maximising on arbitrage. I think we can do trading of many other things than content because we don’t know how to trade content well, actually.

Advertisement. Scroll to continue reading.



What are your EBITDA margins?
We make sensible profits, and sustainable. I can’t give you an exact number. 

OnMobile has around 24% EBITDA Margins, which has been declining. How have you been faring?
OnMobile has a lot of international exposure in their costs, so we shouldn’t be compared with them in that sense. In the VAS industry, 80% of the profits go to 20% of the companies. We are in the 20% bracket.

Will this round take you to an IPO or are looking at another round?
We are not driven by an IPO. We are driven about what you can do with the device, and delivering value to our customers and stakeholders.

But it’s an exit for your investors. They look to exit in 4-5 years
Will we get another round of funding? Who knows…about investors, we have 4 years. This space will change a lot.

Advertisement. Scroll to continue reading.

Read Part 1 of this interview with Vijay Shekhar Sharma of One97 Communications here.

Related: $23M For One97 Communications, IndiaMART & Global Talent Track From Intel Capital

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



The US and other countries' retreat from a laissez-faire approach to regulating markets presents India with a rare opportunity.


When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.


The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.


In this excerpt from the book, the authors focus on personal data and autocracies. One in particular – Russia.  Autocracies always prioritize information control...


By Jai Vipra, Senior Resident Fellow at Vidhi Centre for Legal Policy The use of new technology, including facial recognition technology (FRT) by police...

You May Also Like


135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...


Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...


By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...


Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ