When Bharti Airtel CEO Gopal Vittal says the Telecom Regulatory Authority of India (Trai) needs to regulate the entry of players like WhatsApp — scheduled to launch a voice call service later this year for its 417 million subscribers, 25 million of whom are in India — you know the industry is seriously worried.
More so since, as Vittal’s predecessor Sanjay Kapoor puts it,
voice will soon be just another app. Translated, voice revenues as a
share of mobile revenues will fall to mature market levels of around 50%
in a few years, down from 85% today.
The fall could be even faster given the speed at which smart phones are being sold — from 7.4% of the market a year ago, they account for 17% today. That, and the entry of Reliance Jio, scheduled later in the year, where the focus will be on data-driven plans, is hastening the pace of change.
It’s not as if telecom companies haven’t seen the writing on the wall, or weren’t preparing for it. Short message service or SMS has been a lucrative source of revenue — actually boosting the bottom line, considering the costs of providing them are negligible, and comprised 12% of profit for Bharti Airtel in 2009-10. In Q3FY14, SMS revenues were down to a mere 6% of top line while data, which made an entry in FY12, comprised 10.3% of Q3FY14 revenues — the share was up 60% over FY13.
Which is why, as Idea Cellular’s managing director Himanshu Kapania points out, telcos have bid so aggressively in the just-concluded auctions for data spectrum in February. Idea surprised most when it bid R3,705 crore to buy 900 MHz spectrum in Delhi, ideally suited for data services given its excellent in-building penetration. If even a value-player like Idea was prepared to splurge on 900 MHz, it is clear the data play is getting serious.
It wasn’t just Idea, companies like Bharti Airtel and Vodafone are also accumulating spectrum ideally suited for data.
At the same auction, Bharti Airtel spent another Rs 18,530 crore to buy 900 MHz and 1800 MHz spectrum even though