whatsapp-simWe didn’t see this coming: Whatsapp has partnered with German carrier E-Plus to launch a Whatsapp SIM card, effectively taking on the role of an MVNO. As per AndroidNext, the SIM costs EUR 10, and has the same amount as balance, has Whatsapp usage for free, even with zero balance. Services cost € 0.09 per minute for calls and per SMS on German networks, and € 0.24 per MB for data usage. There’s a special tariff voucher called WhatsAll for €10, where users get 600 credits. Each credit can be used for 1 mb of data, 1 minute of talktime or 1 SMS. Data transfer speeds are 56 KBits per second, which is equal to the kind of speeds you get anyway in Delhi and Mumbai, even on 3G.

Techcrunch says that this is an MVNO from Whatsapp, though without knowledge of the terms of the deal, we can’t be too sure. It could very well be a co-branding deal between e-plus and Whatsapp, or a franchise agreement, of the type that existed between the Virgin Group and Tata Teleservices in India. Note that the FAQ’s on the e-plus page suggest that customer data will not be shared with Whatsapp, indicating that this might be a co-branding deal, since the SIM customer is still an E-Plus customer. The customer is not Whatsapp’s, so this is not an MVNO.

An MVNO, or a Mobile Virtual Network Operator is a company that buys minutes and data packages from telecom operators in bulk, and offers uniquely customized offerings, whether tariff options, content packages, or even concierge services, to customers.

An MVNO’s integration with a telecom operator is far deeper than a mere tie-up, and they can even tie up with different telcos in different areas of operations, offering a customized value proposition for customers. Sometimes, they partner with multiple telecom operators in the same circle.

For the telecom operators, it means that some revenue is guaranteed for them from an MVNO, and since an MVNO targets a niche, it doesn’t necessarily cannibalize on the telcos existing services. Indian Telecom operators, as of 2008, wanted Slim asset based MVNO’s in India, but nothing more.

It was a long time ago, but this is a good time to read our July 2008 overview (incidentally, not even two weeks after we launched) of What Indian Telecom Operators want from MVNO’s in India.

Can Whatsapp Launch An MVNO In India?

Not yet. At present, India’s MVNO policy is in a limbo. As we had reported in 2009, the telecom regulator TRAI had submitted a policy recommendation on MVNO’s to the Department of Telecom (DoT), and while the recommendation had been accepted by the DoT, the final guidelines are still to be issued.

However, the New Telecom Policy Guidelines, which effectively decide the general direction of telecom policy in India, points out that the government still intends to allow MVNO’s in India. From our report on NTP 2012:

“Approving MVNOs (Mobile virtual network operators):  The policy intends to facilitate resale at the service level in both wholesale and retail, by introducing virtual operators while ensuring due compliance with security and other license related obligations.”

Whatsapp still has options in India:

1. Co-branding: It would partner with telecom operators to launch a Whatsapp SIM with similar terms, though we don’t see how that would be significantly different from offering customers a Whatsapp plan. In any case, it is struggling to get Indian telcos signed up for Whatapp specific plans, so an MVNO is quite a stretch. Here’s an idea: launch a Whatsapp SIM with a Whatsapp-friendly telco (say, RCOM), and that might make it easier for other telcos to at least offer Whatsapp plans.

2. Franchise Agreement: of the type between Virgin Mobile and Tata Teleservices, an approach that failed because it was for CDMA services, lack of significant value outside of just funky advertising can make a hip brand look boring. Virgin Mobile was integrated back into Tata Tele, and the telco, following a stake sale to Docomo, launched GSM services which offered better value to users (per-second-billing, for one).

From a market perception perspective, it’s a massive shift for a telco to allow another company to launch a SIM using their network, but not their brand. Indian telcos might have been open to it in 2008, but in the current scenario, it looks tough for Whatsapp.

Additional Reading:

– Part 1: WhatsApp’s Business Head Neeraj Arora on Carrier Deals & Voice, Biz Dev Plans, India, Payments
– Part 2: WhatsApp’s Business Head Neeraj Arora on Integration Of Services, The Facebook Deal & Why He Joined Whatsapp

MVNO Policy
– What Indian Telecom Operators want from MVNO’s in India
DoT Accepts TRAI Recommendations On MVNOs In India; Who Has The Spectrum?
TRAI Recommends 20 Yr License, 74% FDI For MVNOs In India; Favours Telecom Operators

NTP 2012
India’s New Telecom Policy 2012: What’s Changed? Additions & Omissions