Mobile eCommerce Can Be The Game Changer For Telecom Operators

By October 15th, 2010 AT 3:34 PM

Indian telecom operators are faced with a unique challenge of dealing with falling Average Revenue per User (ARPU), even as mobile penetration in urban and rural segments have witnessed significant growth in the past few years, according to Deloitte’s recent thought paper on Mobile eCommerce.

While the number of mobile phone subscribers in India (both GSM and CDMA) crossed the 500 million mark in 2009, ARPU dropped sharply from Rs336 per month in 2005 to Rs147 per month in 2009. The main reason for the drop has been intense competition to capture new accounts by predatory pricing and market saturation. Consequently, operators have increasingly focused on generating alternative revenue streams by providing value added services.

According to Industry projections, Mobile Value Added Services (MVAS) currently contribute about 10-12% total telecom revenue and ofare estimated to contribute about 30% in the next three to four years.

However, MVAS has not been able to produce the desired results in the current scenario as Indian operators have been largely focused on basic infotainment related services (replicating the online experience on mobile platform). These services offer low differentiation and get easily replicated by competitors.

With the availability of high bandwidth 3G networks and increasing smartphone penetration, mobile eCommerce is emerging as a strong area and is expected to drive growth within the MVAS segment.

Additionally, the high prices paid for 3G spectrum will put more pressure on operator profitability and shareholders will demand higher profits. In addition, other players in the mobile eCommerce ecosystem such as device manufacturers, retailers and payment networks will increasingly try to take centre stage and relegate the telecom operators to a mere participant.

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Anbu John BobanleePDNairSanjay BafnaVKP Recent comment authors
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Anbu John Boban

what about mobile commerce ? when is airtel starting it … eagerly waiting for it . 🙂

lee

@PDNair
hard core fact!

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