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In the past few years, the Indian mobile VAS segment has witnessed phenomenal growth as a result of the booming Indian telecom industry. The telecom revolution has helped the VAS segment to come out of its infancy and make enough room for VAS players to expand their horizon in the global markets. Most of the premier VAS providers are looking at leadership positions in this domain-both in the domestic and international telecom markets.

The Asia Pacific region and the SAARC countries represent huge opportunities for VAS players. With the ever-growing subscriber base, and growing popularity of 3G and other technologies, Asia's mature telecom markets are ready to adopt VAS services. In fact, companies are also open for acquisitions and M&A deals, if this would give them significant market presence.

Markets to Watch out
VAS companies are upbeat about their global expansion, especially in the SAARC region that is pulling their attention. Rapid growth of telecommunications and vast growth opportunities in the region are some of the major factors driving this growth.

After testing the success in the Indian market, One97 Communications is looking at other SAARC countries for its further expansion. "We are already working with carriers in Afghanistan, Sri Lanka, Bangladesh, and Bhutan. India is our core focus and we believe a lot needs to be achieved here. Expansion in the international market is inevitable. We have people and products in place and have already started to focus on these markets as well," says Vineet Kaul, senior VP, One97 Communications.

Wipro Infotech is looking for expansion in Bangladesh and Sri Lanka, as well as in Africa. On the other side, the Asia Pacific region represents one of the largest opportunities for Dialogic.

Another VAS player, Utiba has its customer base spread across three different continents and all of them are in developing economies. According to Ritesh Andley, director, product marketing, Utiba, "We find huge potential for our products in the Asian, African and Latin American markets, and we are successful in acquiring customers in all these geographies. However, majority of our customers are in Southeast Asia or SAARC countries."

Apart from its association with Bharti Airtel and other new players in the Indian market, Utiba has also tied up with Mobilink in Pakistan. Mobilink is using Utiba's platform and the company has also entered into a joint venture called U:Gen in Sri Lanka to offer mobile commerce. Utiba has also been associated with Citycell in Bangladesh, and soon it will be able to announce another important association in Bangladesh. Bangladesh and Pakistan are potential markets for Utiba.

Facing Challenges
Different markets are different in their niche requirements. This can vary from one country to another, even if they belong to the same region. More importantly, it's the regulator in each country which is making the rules of engagement different. Speaking on the major challenges associated with entry in the global market, Kaul of One97 Communications says, "For doing business in international markets, the most important aspect is the product line-does it fit the target market, localization effort, support, etc. In case most of these are in place, it becomes more manageable to target carriers and engaging them."

Local content and rights related issues are some of the major bottlenecks VAS companies are facing in the international market.

According to Eamon Kerns, VP, sales, Asia Pacific, Dialogic, "In markets like India, currently 3G is a major issue. India is one of the largest telecom markets. Thus, it is very important for us that the 3G spectrum is made available in India. Moreover, Indian operators need to understand how they can make money from video services."

Different Shades
Demand depends upon the kind of product being sold, the kind of markets that are being targeted, and the customer profile of the carriers. Commenting on the demands in different markets, Andley says, "Huge geographic distances, inaccessible terrains, wide demographic differences, multiple language spoken in a single country are the factors which make each country different, and the product has to be flexible enough to cater to the dynamics that will emerge out of such a situation."

All emerging markets are predominantly prepaid, more or less in the same age of evolution as the Indian market, or even a few steps behind. So, VAS players are facing similar demands in emerging markets as in India.

Talking about the demands, Emon Kerns, VP, sales, Asia Pacific, Dialogic says, "The Indian market holds greater potential to adopt new technologies, especially in the mobility space since there are almost thirteen operators in India which make the Indian telecom market more competitive. Competition drives innovation and that's why technology adoption is very rapid here. But this is not in the case of China as there are only four operators."

New Business Models
The range of business models include-license purchase model, revenue share model, managed service model, or completely white labeled service model. All these are very common with different players in all geographies, including India. "A majority of VAS services today are being launched in the revenue share model between network operators and content/application providers. We see this same revenue share model deployed both in India and other Asia Pacific countries," says Kerns. Most of the countries use very similar business models as that of India. And it's always great to figure out a new business model and make it work.

Global Plans

One 97 Communications is very actively looking at the global market, especially at countries in the SAARC region. Talking about the company's global plans Kaul says, "We have been focused on India since our inception. Off late, we have started to explore global opportunities. Currently, in terms of customers, we are working with Citycell in Bangladesh, Roshan in Afghanistan, etc, and also looking at most of the emerging markets. We have already connected with many carriers in the emerging markets and have seen positive traction. Among the SAARC countries, we are currently working in Bangladesh, Bhutan and Sri Lanka."

"Currently we are looking at markets outside India as extension of territory for our existing products. Investments are being made in terms of having teams in place who go out and connect with customers. However, we are open to opportunities where an acquisition can give us significant market presence," Kaul further adds.

Commenting on the same, Viswanathan Ramaswamy, GM, network and managed services, telecom verticals, Wipro Infotech says, "We are a service integrator and we focus on VAS managed service offerings. We are presently concentrating primarily in India and the Middle East markets. We are investing in integration and management frameworks for multi-vendor VAS. We also have invested in SDP and mash-up applications for helping service providers to monetize the investments that they have made in the VAS platform."

Praveen Rajpal, CEO, Handygo says, "By the end of 2010, we have plans to enter countries like Africa, Bangladesh, etc, as we are working on an 'universal model' which gets acceptable everywhere. This working model makes our entry easier."

Another major VAS player, Comviva is also eying the top slot in the global market. The company is presently working with over 100 mobile operators worldwide. The company's emerging presence on the global map was evident from the break-up of its revenues, with as much as 65% of its gross revenue coming from its international business.

One area of significant growth is the rural segment, particularly in markets like India, Africa and Indo-China, where low literacy levels and language diversity present unique challenges to telecom operators. Comviva's footprint covers nearly all major global markets and the company is ramping up its operations in new markets like Southeast Asia and Latin America. Operations are being opened in Johannesburg, Nairobi, Accra, and Ciaro in this fiscal.

Leading VAS player, OnMobile, is very bullish in the markets of India, Pakistan, and Bangladesh, as far as SAARC countries are concerned. Commenting on the same Arvind Rao, CEO, OnMobile says, "On the global front, the company already has its presence in thirteen countries of Asia Pacific, the Middle East, and Africa, and around eight to ten countries in Europe and North America. We are entering these emerging markets through global deals with large conglomerates, like Vodafone Global and Telefonica."

With aggressive expansion and investment plans, VAS players have pulled up their socks to tap the global markets. VAS companies are spreading their wings and optimizing their strength and strategies to grab a share in the global pie. The global markets have advantages like crucial growth, new and advanced technologies, learning and innovation, and bigger and more profitable markets.

Arpita Prem
arpitap@cybermedia.co.in

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