The m-VAS industry in India is characterized by significant growth opportunities driven by increased mobile subscriber numbers and demand for differentiation among operators. Currently contributing about 10% to the telecom revenue, it is predicted to reach substantial figures, potentially soaring to Rs 250 billion by 2015. The industry faces challenges such as revenue sharing agreements and regulation, yet holds promise for continued expansion largely due to entertainment, information, and m-commerce services.

1. M-VAS INDUSTRY IN INDIA OPPORTUNITIES, GROWTH AND CHALLENGES

2. INTRODUCTION TO VAS SECTION 1

3. The value added services are characterized as under:- Not a form of core or basic service but adds value in total service offering. Stands alone in terms of profitability and also stimulates incremental demand for core or basic services. Can sometimes be provided as stand alone. Do not cannibalize core or basic service. Can be add-on to core or basic service and as such can be sold at premium price. May provide operational synergy with core or basic services. Mobile Value Added Services are not part of the basic voice offer and are availed separately by the end user. They are used as a tool for differentiation and allow mobile operators to develop another stream of revenue. VALUE ADDED SERVICES

4. NEED FOR M-VAS SECTION 2

5. An explosive subscriber and revenue growth, yet thin profit margin line has forced mobile service providers to look beyond voice based service. Over the last 5 years, the telecom industry has realized the importance of MVAS. Given the declining ARPU and increasing competition among operators it is imperative to focus on alternate revenue streams. That is where there is a felt need for capitalizing on the Value Added Services Market. Today the various MVAS entities are still struggling with issues such as the correct definition of MVAS, the roles and responsibilities of each entity in the value chain, revenue sharing arrangements between them and other critical issues such as regulation of the MVAS market. REASONS:

6. The reasons for the increasing importance of MVAS can be classified as : Decrease in ARPU despite increase in MOU. Need for differentiation . Number of Licensees . Decreasing Call Rates . 3G bidders who are non operators . Saturation in Metro and Urban Market . Increasing need and demand from consumers .

7. TYPES OF M-VAS SECTION 3

8. There are basically 3 types of M-VAS: Entertainment VAS : These provide entertainment for leisure time usage. These not only generate heavy volume (owing to its mass appeal) but also heavy usage. An example of these kinds of services is Jokes, Bollywood Ringtones, CRBT (Caller Ring Back Tone) and games. Information VAS : These services are characterized by the useful information it provides to the end user. The user interest comes in from the personal component and relevance of the content. E.g. updates on movie tickets, news, banking account, real-estate, education, stock updates, etc. mCommerce VAS : (Transactional services) These are the services which involve some transaction using the mobile phone. An example of this kind of service is buying movie tickets using mobile phone or transfer of money from one bank account to the other.

9. DETAILS ON VAS TYPES:

10. PREDICTIONS & ESTIMATIONS SECTION 4

11. Mobile value-added services hold a tremendous revenue-generating potential in which could rake in around Rs 18,000 crore by 2012. It will contribute about INR 6,000 crore to total revenue from telecom operations by end of 2009. This is likely to go up to Rs 18,000 crore by 2012. Presently Mobile VAS accounts for 10% of the operator’s revenue, which is expected to reach 18% by 2010. VAS can greatly be improved with forthcoming 3G launch. The revenue from mobile value added services has already touched 4600 crore. With 3G services to be rolled out by next year, the VAS industry is expected to increase its share manifold, with some industry estimates pegging the figure at Rs.200 billion by 2015. PREDICTIONS ON M-VAS

12. The revenue from VAS is expected to cross Rs.250 billion (Rs.25,000 crore) by 2009-10, which is more than 30 percent of the revenue the telecom access service providers are expected to generate in the next five-seven years, TRAI said. The Indian Value Added Services (VAS) is expected to log in a turnover of over Rs 20,000 crore by the year 2015 noted telecom experts during the, 4th International Conference & Exhibition of VAS Asia 2008. According to a report by iSuppli, while VAS could contribute more than 25% of the total cellular revenues by 2012.This could catapult Mobile VAS market to become US$10 billion industry in India alone.

13. The Current Mobile VAS industry is estimated at Rs. 9760 crores by end June 2009 and to touch Rs.16520 crores by end June 2010, according to IAMAI report – 2008. The current MVAS market (as of June 2008) is Rs 5780 crores. P2P SMS contributes Rs 2140 crores to the MVAS market and this goes only to the operators (the balance Rs 3640 crores is divided between the different stakeholders including the operators.). Rs 2312 crores come from CRBT/RT while the balance Rs 1329 crores is divided amongst the other services.

14. MVAS currently contributes around 9 % to the operator’s revenue. It is expected to increase to 10.4 % in the next 1 year and 12% by June 2010.

15. SECTION 4 VAS IN INDIA

16. VAS constitutes 7% of total telecom revenue for Indian operators. SMS constituted 55% of VAS revenue in 2006 [P2P/A2P/P2A, A = Application, P=Person), the growth was majorly driven by reality shows like Indian Idol/Kelloggs/KBC etc. Digital music (including CRBT and ringtones) constitutes 35% of VAS revenue. CAGR of 44% (2007 – 2010), Growth acceleration will begin in 2009, as various challenges are overcome, size of mature user base increases, and Telco focus on high end user VAS heightens. Bollywood and Cricket is the killer content - though no significant investment has gone beyond developing local apps or even content/services. PAST & PRESENT:

17. Revenue share between telcos & content providers / aggregators is 70:30, substantially more skewed in favor of telco than in other countries - further aggravated by lack of payment mechanisms. SMS/IVR/Music downloads/Internet Apps/Search will see an upsurge; limited growth of UGC and mCommerce. Almost half of Indians use ULCH (Ultra Low Cost Handsets). Operators still dominate the revenue sharing arrangement in VAS [Of the amount paid by end users, 60-70% is kept by operator, aggregator gets 20-25% and content app/owner gets 10-15% of the revenue] The VAS Industry in India has evolved into a $ 1 billion + industry in 2008 with an estimated annual growth rate of 40 - 50 percent.

18. Customized knowledge services company Boston Analytics today unveiled a new report that forecasts a 50 percent compounded annual growth rate (CAGR) in India's Mobile Value Added Services (MVAS) industry that will lead to a US$348.8 million market by 2009. According to a recent IAMAI report, the VAS industry in India is estimated at Rs. 2,850 crore and is suppose to grow at 60% to touch Rs. 4560 crore at the end of 2007. Despite the global mobile phone market recording a slowdown in Q4 2008, the value added services (VAS) industry is on a up- beat mood in India. This is due to the continuing growth in mobile subscriber base in rural and semi urban areas and the popularity with VAS services among the younger generation.

19. REFERENCES: FOR 2008 FIGURES http://s3.amazonaws.com/pptdownload/imrbiamaimobilevasreportaugust2008090403021309phpapp02.pdf?Signature=S3CZCOJLIBTZNUqnZ7LTLYGmjsM%3D&Expires=1243505058&AWSAccessKeyId=1Z5T9H8PQ39V6F79V8G2 FOR 2006 FIGURES http://www.iamai.in/Upload/Research/mobile.pdf