Value-added services to touch Rs21,000 crore by 2014: IBM

Tech major IBM has projected that revenue from value-added services (VAS) would touch Rs21,000 crore by 2014, if telecom operators adopted an aggressive VAS strategy, as their average revenue from voice is on a steep decline due to fierce competition and regulatory nudging.
    
"Telecom operators need to find a solution to the imminent further revenue loss as Average revenue per user (Arpu) keeps declining. Enhancing data and allied revenue from VAS appears to be an imperative step," IBM India and South Asia vice-president & partner, global business service Amar Vaidya said here today.
    
He was talking to the media after releasing a report on domestic mobile market titled 'Be smart, drive VAS: Strategies for success in a growing telecom market'.
    
The 743-million domestic mobile market, which has been the world's fastest market for years, is also known for the lowest Arpu or average revenue per user, which today stands at a low Rs141, bringing red mark to the balance sheet of almost all the operators.
    
IBM feels that in the times to come, this will only go down further as 80% of the revenue now comes from voice services, and unless operators do something urgently and innovatively on non-voice front, it will continue to head south.
    
"Telcos must unlock value from customer data and launch such content that leads to higher VAS adoption; innovate revenue models and pricing to generate sufficient commerce around the content; enable partner ecosystem to pursue collaboration; and develop agile delivery capabilities around platforms, assts and organisation," Vaidya said.
    
It can be noted that Arpu was a high Rs261 in 2007, when the market hit a very high growth trajectory and since then it has been on the downslide- Rs220 in  2008, Rs163 in 2009 and Rs141 last calendar year.
    
The situation is more alarming considering the fact that VAS contributes not a little over 5% of the overall revenue of the operators which stood at $39 billion in 2010. VAS income during the period stood at a poor $2 billion, and SMSes contribute over 16% of this.
    
However, dependence on voice for revenue has been coming down slowly. While in 2007 it was as high as 93%, it came down to 90% in 2008, further down to 85% in 2009 and to 80% last year.