OTT services could hit the bottom lines of telcos, says Rohit Chordia at Kotak Institutional Equities, who points out that the yield per minute...
OTT services could hit the bottom lines of telcos, says Rohit Chordia at Kotak Institutional Equities, who points out that the yield per minute on a VOIP is lower than that on the traditional circuit-switched network.
This loss can be ‘offset’ as existing users consume more data and new users—lured by VOIP voice calling arbitrage—start using data.
In his view, the offset math doesn’t look too bad as long as volumes that move from traditional to VOIP are not huge in a short period of time.
The ultimate solution lies in the telcos working with a total ARPU rather than separate voice and data ARPUs; they should move towards bundled pricing.
Chordia feels that if not licensing OTTs leads to unaddressed security concerns, then they should be licensed, else, they shouldn’t. “Some countries have mandated ‘communication OTTs’ to be licensed, but I do not see a strong case for bringing them under telecom licensing,” he says.
* Every voice ‘minute’ moving from traditional circuit-switched network to VOIP leads to a loss in revenues and EBITDA
* This is because the ‘yield’ on a VOIP per minute is lower than that for a ‘traditional’ minute
* Losses can be made up from additional non-VOIP revenues as users spend more on data
* Every 1%—1% incoming and 1% outgoing—voice volume moving from traditional to VOIP will drive a revenue loss of Rs 3.3 bn for Bharti, which would mean an EBITDA loss of Rs 2.65 bn, assuming 80% incremental margin