Market Research Report : Mobile Value Added Services (MVAS) in India 2012

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India houses 811.6 bn cellular subscribers. This huge subscriber base is split in 66:34 between rural and urban users respectively. With falling prices of mobile voice calls and text messages, telecom operators are turning to additional services which are offered to customers; such services are called Mobile Value Added Services or MVAS. With diverse demography, lifestyle and consumer preferences amongst urban, sub-urban and rural consumers across the country, MVAS are destined to generate high returns, if deployed correctly. World’s third largest sector, Indian Telecom sector is betting big on MVAS segment with wide variety of products in variable price range. MVAS adoption is polished to increase by manifold with increasing numbers of mobile devices and rising demand for mobile contents across India.

Rise in disposable income has revolutionized consumer’s buying and spending trend towards PC, mobile devices, communication equipments and services. It has catalyzed the trend of smartphone & featurephone which enhances the scope for MVAS with mobile apps and rich mobile content. “Despite of low ARPU in India, telecom operators will earn significant amount of revenue through various segments of MVAS” says Mr. Kalyan Banga, Product Manager at Netscribes.

The report begins with ‘Introduction’ section covering overview of Mobile Value Added Services which provides basic idea of the segment, characteristics of MVAS products and fundamental MVAS Value Chain which describes the basic flow of MVS services from content owner or VAS service provider to end-user.

The ‘Market Overview’ section elaborates global & domestic market state of MVAS. It is accompanied by a plethora of statistical information regarding major MVAS segments in various countries including in India, such as global trend, demand in various countries, revenue generated from MVAS in the said countries, domestic market size of MVAS and projection of the same in the coming years and other related information. The India section also elaborates on major MVAS components and revenue sharing model of the same. Major MVAS delivery platforms are also covered in the section with details regarding each of the components’ cost, application and usage trends. “Analysis show, SMS is the most popular delivery platform in India due to its reach, convenience of usage and wide acceptability” noted Kalyan. The section ends with SWOT analysis of the Indian MVAS market.

It is followed by ‘Scope in India’ section where potential verticals for MVAS products in India are elaborated. Specific verticals have been highlighted with information regarding each of their market state and opportunity areas for MVAS. The section continues with ‘Vendor Opportunity’ stressing on specific prospective segments and areas for MVAS. The section consists of statistical charts and pictorial representation for better und

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Market Research Report : Mobile Value Added Services (MVAS) in India 2012

  1. 1. Mobile Value Added Services in IndiaMarch 2012
  2. 2. Executive Summary Mobile Value Added Services (MVAS) market size in India was around at INR x1 bn in 20-- With low call and SMS charges, Telecom companies in India are increasingly getting dependent Market on revenues from MVAS for higher profitability Revenue earned from MVAS are shared amongst body1, body2, body3 and, body4 in y1:y2:y3:y4 ratio for content1 Drivers: Challenges: Rising Mobile Device Adoption and Low Penetration in Rural Areas Drivers & Colossal Wireless Subscriber Base Low Average Revenue Per Unit Challenges Increase in Disposable Income and Economic Advancement Introduction and Availability of Next Generation Cellular Networks Extensive Usage of Plastic Money TRAI Proposes proposal1 Trends &Developments Mobile VAS Program1 MVAS for segment1 Major Players ACL Wireless Ltd. CanvasM Technologies Ltd. Geodesic Ltd.Competition IMI Mobile Pvt. Ltd. One97 Communications Ltd. OnMobile Global Ltd. MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 2
  3. 3. •Introduction•Market Overview•Scope in India Vendor Opportunity•Drivers & Challenges•Major MVAS Players•Trends & Developments•Strategic Recommendations•Appendix MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 3
  4. 4. Introduction Mobile Value Added Services (MVAS) Overview • Mobile Value Added Services (MVAS) are the services provided by telecom operators directly or indirectly, beyond standard voice calls • Majority of the MVAS products have the following common characteristics, It is not a form of basic service, rather adds value to total service offering Stands alone in terms of profitability Stimulates incremental demand for core service(s) It may stand alone operationally It does not cannibalize basic service(s) It may provide operational or administrative synergy among other services and it is not merely for diversification Fundamental MVAS Value Chain Element1 Element2 Element3 Element4 Element5 • The content1 of the product1 which will be served to consumers, are provided by element1 • Element2 create the product2 using tool1 and tool2 • Element3 provides technology1 for the product2 for operation1 • Element4 host the product3 on platform1 and offer the product to elemen5Source: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 4
  5. 5. Next generation telecom network and MVAS usage are expected to grow side-by-side, helping each other mutually Market Overview – India • Mobile Value Added Services market size in India was valued at around INR x1 bn in 20-- • With low call and SMS charges, Telecom companies in India are increasingly getting dependent on revenues from MVAS for higher profitability Around x2% of the total revenue from mobile services, come from MVAS as per 20-- - -- Telecom operators, investing heavily on technology1, is leveraging on product1 to generate returns and overcome cost of technology2 • Element1 in India is at a growth phase currently wherein operation1 has slowly started picking up along with product1 consumption, mutually benefiting each other to grow significantly Considerable adoption is expected between 20-- and 20-- and element2 will attain maturity phase afterwards • Penetration of product1 in rural areas of the country is still low, standing at around x3-x4% as in 20-- MVAS Market Size – India INR bn +Y1% 0 20-- 20-- 20-- 20-- 20--Source: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 5
  6. 6. Major MVAS Components & Revenue Sharing Model in India MVAS Components • Product1 News and • Product10 Operator • Product2 Informative • Product11 Services • product3 • product12 Contents • Product4 • Product13 Communication • Product5 Mobile Apps • Product14 • product6 • product15 • Product7 • Product16 Location-Based Mobile Media • Product8 • Product17 • product9 Services • product18 MVAS Revenue Sharing Model • Revenue earned from MVAS are shared amongst body1, body2, body3 and, body4 in y1:y2:y3:y4 ratio for content1 • For content2 the revenue is split amongst body1, body2 & body3 in z1:z2:z3:z4 ratio Content Type Body1 Body2 Body3 Body4 Content1 X1% x3% X5% x6% Content2 x2% X4% x6% NASource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 6
  7. 7. SWOT Analysis of MVAS Market in India Strengths Weaknesses • Strength1 • Weakness1 • Strength2 • Weakness2 • Strength3 • Weakness3 • Strength4 • Weakness4 SWOT Analysis Opportunities Threats • Opportunity1 • Threat1 • Opportunity2 • Threat2 • Opportunity3 • Threat3 • Opportunity4 • Threat4Source: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 7
  8. 8. Scope in India - Potential Verticals (-/-) • Various services of different verticals can be delivered via Mobile Value Added Services • MVAS not only ensures format diversity and delivery flexibility but also maximum reach due to the presence of mammoth wireless subscriber base in the country • Sector1 consists of segmentx1, segmentx2, segmentx3, segmentx4 and segmentx5 • Market size of the sector can be presented in the combined form of INR x1 tr and x2 mn unit consumption per Sector1 annum as of 20-- • MVAS can be implemented by processx1, benefitx1, usagex1 and applicationx1 • Sector1 consists of segmenty1, segmenty2, segmenty3, segmenty4 and segmenty5 • Market size of the sector can be presented in the combined form of INR y1 tr and y2 mn unit consumption per Sector2 annum as of 20-- • MVAS can be implemented by processy1, benefity1, usagey1 and applicationy1 • Sector1 consists of segmentz1, segmentz2, segmentz3, segmentz4 and segmentz5 • Market size of the sector can be presented in the combined form of INR z1 tr and z mn unit consumption per Sector3 annum as of 20-- • MVAS can be implemented by processz1, benefitz1, usagez1 and applicationz1Source: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 8
  9. 9. ‘Service1’ & ‘Service2’ segments in the product1 market are of high relevance to m-commerce Vendor Opportunity (2/5) Mobile Commerce (m-Commerce) • Mobile Commerce is the activity of commencing commercial transactions between both B2C and B2B entities via mobile devices It is a part of the broader, e-commerce market which accommodates any commercial transaction via internet • Increasing tendency to save time and energy, especially amongst the working population will further intensify the e- Commerce market by a large extent • Market size of e-Commerce is estimated to grow at a dynamic growth rate of x1% to reach INR x2 tr in 20-- from INR x3~ tr in 20-- • Amongst all the e-commerce market segments, ‘Service1’ and ‘Service2’ are specially of high relevance to the m- commerce market e-Commerce Market - Growth Service1 Market - Growth Service2 Market - Growth 3 +y1% 100 100 +y3% +y2% 2 50 50 1 0 0 0 20-- 20-- 20-- 20-- 20-- 20--Source: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 9
  10. 10. Product1 Value Chain Element1 Brand Representative Element5 (Client) Element2 Portable Cellular Phone Tablet PC Media Player Element4Source: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 10
  11. 11. Drivers & Challenges – Summary Drivers Rising Mobile Device Adoption and Colossal Wireless Subscriber Base Increase in Disposable Income and Economic Advancement Challenges Introduction and Availability of Next Generation Cellular Networks Low Penetration in Rural Areas Extensive Usage of Plastic Money Low Average Revenue Per Unit Soaring Enterprise Demand Growing Demand for Rich Mobile Contents MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 11
  12. 12. Public: Domestic Company – Company1 (-/-) Company Information Offices and Centres – India Adress line1 Corporate Address Adress line2 City. Country Tel No. +91- --- - ----- City Name Fax No. ++91- --- - ----- Website www.------.com Year of Incorporation 19-- Ticker Symbol ------ Stock Exchange Exchange1 Head Office Products and Services Category Products/Services Key People • Utility VAS Solution Name Designation • M-Commerce Solution MVAS Products • Mobile App development Mr. X Chief Executive Officer • Digital Asset Management Mr. Y Chief Financial Officer Mr. Z Chief Operating OfficerSource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 12
  13. 13. Public: Domestic Company – Company1 (-/-) Financial Snapshot Key Ratios Revenue Profit y-o-y change Total Income Net Profit/Loss Particulars 2011 2010 2009 2008 INR mn INR mn (2011-10) c4 Profitability Ratios 150 8 Operating Margin 2.23 0.74% -1.49% -9.59% -10.70% c2 c3 6 100 Net Margin -34.74 -35.26% -0.51% 1.00% -37.12% c1 4 Profit Before Tax Margin -53.05 -53.57% -0.51% -25.32% -12.44% 50 Return on Equity -10.93 -11.06% -0.14% 0.21% -5.79% 2 Return on Capital Employed 0.18 0.06% -0.12% -0.55% -0.48% 0 0 Return on Working Capital 78.72 77.98% -0.74% 0.18% -3.99% 20-- 20-- 20-- 20-- Return on Assets -2.26 -2.29% -0.04% 0.05% -1.56% Return on Fixed Assets -2.88 -2.94% -0.06% 0.09% -2.98% Financial Summary Cost Ratios • The company incurred a net profit of INR a1 mn in FY 20--, as Operating costs (% of Sales) -2.95 99.22% 102.16% 112.14% 113.76% compared to net profit of INR a2 mn in FY 20-- Administration costs (% of 1.04 18.03% 17.00% 15.75% 18.00% Sales) • The company reported total income of INR a3 mn in FY 20--, Interest costs (% of Sales) 20.57 63.33% 42.77% 45.59% 29.69% registering an increase of a4 per cent over FY 20-- Liquidity Ratios • The company earned an operating margin of a5 per cent in FY 20--, Current Ratio -54.82% 0.82 1.81 4.42 7.13 an decrease of a6 percentage points over FY 20-- Cash Ratio -96.41% 0.19 5.34 2.99 5.66 • The company reported debt to equity ratio of a7 in FY 20--, an Leverage Ratios increase of a8 per cent over FY 20-- Debt to Equity Ratio 45.86% 3.82 2.62 2.92 2.72 Debt to Capital Ratio 6.85% 0.75 0.70 0.72 0.71 Key Financial Performance Indicators Interest Coverage Ratio 124.52% 0.01 -0.05 -0.27 -0.46 Indicators Value (--/--/20--) Efficiency Ratios Market Capitalization (INR mn) 10,985 Fixed Asset Turnover -9.25% 0.08 0.09 0.07 0.06 Asset Turnover 18.69% 0.06 0.05 0.04 0.03 Total Enterprise Value (INR mn) 87,544 Current Asset Turnover 5.19% 0.47 0.45 0.11 0.07 EPS (INR) 48.39 Working Capital Turnover -308.15% -2.08 1.00 0.14 0.08 PE Ratio (Absolute) 66.9 Capital Employed Turnover 58.09% 0.29 0.19 0.16 0.12Source: Improved Decline MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 13
  14. 14. Public: Domestic Company – Company1 (-/-) Key Business Segments Key Geographic Segments Product1 Product2 Product3 India Outside India 100% 100% 50% 50% 0% 0% 20-- 20-- 20-- 20-- 20-- 20-- 20-- 20-- Key Information Description Details • aaaaaaaaaa Overview • bbbbbbbbb • ccccccccccc • It offers products in the areas of m-commerce, entertainment, media portals and interactive television programming, mobile marketing, user-generated content and social networking, mobile utility, data and Extended Product 3G, and information and network through mobile access channels, such as voice, SMS, WAP, USSD, voice, Portfolio video, on-device portal, and Web • Music products comprising Ring Back Tones (RBT), M-radio, reverse RBTs, devotional songsSource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 14
  15. 15. Private: Domestic Company – Company2 (-/-) Company Information Offices and Centres – India Adress line1 Corporate Address Adress line2 City. Country Tel No. +91- --- - ----- City Name Fax No. ++91- --- - ----- Website www.------.com Year of Incorporation 19-- Ticker Symbol ------ Stock Exchange Exchange1 Head Office Products and Services Category Products/Services Key People • Infotainment Services Name Designation • Mobile Media Contents MVAS Products • Mobile Voice Solutions Chief Executive Officer and Chief Mr. X • Call Management Solutions Operations Officer Mr. Y President of Sales and MarketingSource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 15
  16. 16. Private: Domestic Company – Company2 (-/-) Financial Snapshot Key Ratios y-o-y change Particulars 2011 2010 2009 2008 Revenue (2010-09) Revenue Profit / Loss Profit Profitability Ratios INR mn INR mn Operating Margin -5.75 59.76% 65.51% 75.51% 84.64% 2,467,384.52,500,000 2,248,457.8 1,000,000 Net Margin -0.65 20.94% 21.58% 35.03% 43.42% 1,865,274.2 Profit Before Tax Margin 4.60 27.02% 22.41% 37.00% 46.07%2,000,000 800,000 Return on Equity -0.44 16.63% 17.07% 44.01% 30.53%1,500,000 600,000 Return on Capital Employed -3.04 57.06% 60.09% 121.39% 108.12%1,000,000 770,874.4 400,000 Return on Working Capital -12.19 22.76% 34.95% 62.37% 51.28% Return on Assets -0.41 16.59% 16.99% 43.60% 30.45% 500,000 200,000 Return on Fixed Assets 14.16 93.08% 78.92% 166.10% 98.92% 0 0 Cost Ratios 2008 2009 2010 2011 Operating costs (% of Sales) 5.58 36.86% 31.28% 22.96% 11.18% Administration costs (% of -3.68 14.87% 18.56% 18.79% 21.10% Financial Summary Sales) Interest costs (% of Sales) -0.01 0.04% 0.05% 0.00% 0.18% • The company incurred a net profit of INR 470,723 mn in Liquidity Ratios Current Ratio 19.05% 5.28 4.44 4.10 2.32 FY 2011, as compared to net profit of INR 402,544 mn in Cash Ratio -19.59% 2.29 2.85 1.75 1.04 FY 2010 Leverage Ratios • The company reported total income of INR 2,248,458 mn Debt to Equity Ratio N.A. N.A. N.A. N.A. N.A. Debt to Capital Ratio N.A. N.A. N.A. N.A. N.A. in FY 2011, registering an increase of 20.5 per cent over Interest Coverage Ratio 25.57% 1791.20 1426.42 #DIV/0! 488.03 FY 2010 Efficiency Ratios • The company earned an operating margin of 59.8 per Fixed Asset Turnover 20.70% 4.21 3.49 4.65 2.17 Asset Turnover -0.12% 0.75 0.75 1.22 0.67 cent in FY 2011, a decrease of 5.8 percentage points over Current Asset Turnover -30.24% 0.83 1.20 1.32 0.64 FY 2010 Working Capital Turnover -33.35% 1.03 1.54 1.75 1.13 Capital Employed Turnover -0.31% 0.75 0.75 1.23 0.67Source: Improved Decline MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 16
  17. 17. Private: Domestic Company – Company2 (-/-) Key Information Description Details • Company2 is a mobile media company which offers solutions for discovery, branding and revenue generation on the mobile platform Overview • It caters to content destination management, mobile content creation, aggregation and mobile marketing • It offers MVAS solutions via SMS including contests, notifications, special offers, alerts, WAP links, WAP portal development, mobile advertising, and content management and distribution Extended Product • Its MVAS consultancy and support services include concept and ideation for brand Portfolio awareness, higher reach, lead generation, engagement, sales, interactivity, targeted reach, and content delivery • It also offers mobile online and offline games as direct consumer MVAS productSource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 17
  18. 18. Trends & Developments Introduction of • aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa Biometrics in Trend1 • bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb Education • ccccccccccccccccccccccccccccccccccccccccccccccccccccc Biometric ID Cards • aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa for Public Trend2 • bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb Transportation • ccccccccccccccccccccccccccccccccccccccccccccccccccccc Biometrics • aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa Application in Development1 • bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb Customs • ccccccccccccccccccccccccccccccccccccccccccccccccccccc • aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa Development2 • bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbb • cccccccccccccccccccccccccccccccccccccccccccccccccccccSource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 18
  19. 19. Strategic Recommendations (-/-) • aaaaaaaaaaaaaaaaaaaaa • bbbbbbbbbbbbbbbbbbbbb Strategic Recommendation1 • aaaaaaaaaa • bbbbbbbb • ccccccccc Strategic Recommendation2 • aaaaaaaaaa • bbbbbbbb • cccccccccSource: MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 19
  20. 20. Thank you for the attentionThe Mobile Value Added Services in India report is a part of Research on India’sTelecommunication Series. For more detailed information or customized researchrequirements please contact:Kalyan BangaPhone: +91 33 4064 6215E-Mail: kalyan.banga@netscribes.comResearch on India is a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quickinsights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries onAbout NetscribesNetscribes is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business &corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base.Netscribes is a one-stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd.or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and priorpermission is required for guidelines on reproduction. MOBILE VALUE ADDED SERVICES IN INDIA 2012.PPT 20

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