'India is now a hot market for mobiles'

Written by M Sarita Varma | Updated: Nov 8 2010, 06:30am hrs
Mobile value added services (VAS) market is the most under utilised cashcow in the Indian telecom operators stable. But enter 3G/WiMAX and it would be a big wow in m-commerce, says Vinod Vasudevan, Group CEO, Netherlands-based mobile marketing solutions firm Flytxt, busy on a hiring spree in its Indian base. Its facility in Technopark, Thiruvananthapuram is buzzing with the sales activity of the Dutch firm, fanning out its nascent markets in South Africa, Middle East and Latin America. Flytxt is funded by global venture capital giants like Clifton Holdings, IVC Venture Capital AG and Jetzthaus Grundstuecksverwaltungs GmbH. Cellular operators in India will have to supplement their stagnant voice revenues. 3G would be their opportunity window. Ringtones and wallpapers are not the only form of mobile entertainmentmore music, games, jokes, cricket, social networking and other infotainment will soon bring the best out of the VAS market, says Vasudevan in a free-wheeling chat with M Sarita Varma. Excerpts:

What is the flavour of change for the mobile user in India in the next couple of years, now that 3G is on the way

The 3G rollout will popularise the excitement of internet user experience on the mobile phone in India. This will significantly benefit the adoption of m-commerce.

We should also look forward to the dot band in LTE (long term evolution) stream. Used with voice-over IP, it will give full bandwidth to iPad, tablets or products like Kindle. This could trigger an education sector revolution.

Near-field communications (NFC) may catch up faster. Mobile couponing has growth potential. Being portable and popular mobile phone will soon turn out to be favoured payment channel. At the same time, regulators and other stakeholders will have to come together to sort out security issues and network challenges.

What would be in it for the VAS market Would the mobile firms be stumped by agony of too many choices

The Rs 75,000-crore VAS market in India is now a hot dynamic mobile market. Mobile subscriber base is still growing at a rate of 8 million per month. New players are entering the fray. Competition for customer wallet share is hotting up. At present, in India, the mobile operators driving income is person-to-person (P2P) messaging. From 10% of total revenues of telecom operators, this is estimated to grow to 40% within three years.

Cellular operators in India will have to supplement their stagnant voice revenues. 3G and LTE would be their big opportunity window. Ringtones and wall papers are not the only form of mobile entertainmentmore music, games, cricket, social networking and other infotainment will soon bring the best out of the VAS market.

The entry of data services, cell broadcasting, video streaming etc could completely change the rules of the game. For telecom operators, new value added services products will prove the key service differentiator.

Many of these products have short lifecycles. Thus identifying the right VAS product will be a major challenge before the mobile phone service provider.

In India, using mobile advertising as in third party brands is rather new. What is your contribution to fine-tuning these market models How many subscribers do you have

True, mobile operators sell some commercial product to subscribers, but do not use third party brand advertising yet in India. There are technical complexities that deter them from trying this on their own.

Flytxt steps in to give mobile companies a fully-integrated,automated and flexible technology platform, which can directly link them to their subscribers. This way, the mobile firms can preserve their time and energies, for thinking up creative ideas in marketing. For instance Flytxt product Neon helps weed out customer spam messages. It helps marketing companies try iternative marketing, do instant campaigns, test new ideas hands-on and analyse results better and faster.

Our installations in India support about 150 million subscribers. We supply technology platforms to mobile operators,equipping them to earn more revenues through conversational marketing programmes.

A Gartner report says wireless service subscriber base is likely to grow to 771 million connections in 2013, with a CAGR (Compounded Annual Growth Rate) of 14.3%.

You are in the business-to-business (B2B) terrain. What is your revenue model

We work as partners, not as technology suppliers. Thus we have a revenue-sharing model. Last year, we notched a tie-up with Reliance Communication to deploy our technology platform. Now we have a tie-up with two other operators, on a 50:50 revenue sharing basis. But, in true spirit of competition, the new partners have sought a confidentiality pact that bars from disclosing names.

Your UK-born chairman David Harper says the world will be curious about an Indian mobile marketing technology manufacturing base of a Dutch firm selling to Africa and Latin America. Whats so watch worthy about the Indian mobile business success

As we know, India has been a late entrant to mobile business. However, the going was so complex and challenged in the last decade that the biggest innovation-push has been in India. Thus the world looks forward to India to create the next market-waves.

As to Flytxt, we sniff high-growth mobile marketing technology markets in South Africa, Latin America and West Asian countries. Our base in Technopark in India would be the right hub to manufacture the technology products for these products. India has the cost advantage and the skill advantage too. We have plenty of qualified talent that can be trained.

What would be the dimensions of Flytxts current expansion What kind of earnings do you count on

We are ramping up manpower in offices in Johannesburg, Technopark in Thiruvananthapuram, Delhi and Mumbai. Flytxts Board of Directors meeting at Capetown last month decided that the thrust of expansion would be at the Technopark based office. We would need senior and middle management people at product consulting and technical support. We are expanding our sales team too significantly. Within an year, the headcount will grow from 108 to 200 or more.

After assessing the market, we are confident to persuade more mobile firms to targeted mobile marketing. Our growing product range would help mobile firms in behavioural analytics,segmentation,campaign exection, return on investment tracking, and reward fulfillment and confirmation. These would fetch them more revenues. Within an year, we envisage that our revenue fountain will shoot up by 500%. Ultimately, it would turnout to be a win-win situation for all.