Telecom service provider Idea Cellular on Thursday said messaging companies (OTT players) have impacted its non data VAS services revenue.
Idea Cellular second quarter revenue fiscal 2014 decreased 3.29 percent to Rs 6,323 crore from Rs 6,538 crore in the first quarter.
Revenue increased 18.98 percent compared with Rs 5,314 crore in the second quarter of previous financial year.
The second quarter profit of Idea Cellular declined 3.24 percent to Rs 448 crore from Rs 463 crore in the first quarter of current fiscal, said Idea Cellular.
Idea Cellular’s second quarter profit increased 86.67 percent from Rs 240 crore in the second quarter of fiscal 2013.
OTT strikes in India
“The non data VAS services are under pressure due to TRAI new regulation of double confirmation and threat emerging from free messenger & chat OTT applications and services,” Idea Cellular said on Thursday.
Messaging players from China, Japan and America are making beeline in India and started building user base. They thrive thanks to smartphone penetration in India. Some of these free messaging apps are even advertising heavily in Indian media.
Recently, the Cellular Operators Association of India (COAI) said the telecom industry body will invite OTT players as its members. This is line with the convergence happening in the local mobile industry.
Last week, China Mobile, the number one telecom operator in the world based on mobile user base, admitted that its revenue and profit in the third quarter were affected by free messaging players in China.
Apparently, Idea Cellular is the first telecom operator to admit that messaging applications are becoming a threat.
Idea Cellular financial performance
Idea Cellular said Value Added Services (VAS) contribution in second quarter increased to 16.1 percent from 15.6 percent in Q2 FY 2013.
The Data revenue as a percent of Service Revenue improved 3.3 percent on y-o-y basis to 8.7 percent. With 14.7 million additional Idea subscribers initiating mobile data usage, data subscribers increased to 33.6 million (2G+3G).
Idea Cellular said the blended per user data usage grew to 178 Megabytes, thereby data volume exploded @99.6 percent to 17.5 billion Megabytes in Q2FY14 over last year. However, the realised rate (ARMB) is under competitive pressure falling by 1.0 paisa per MB (3.2 percent) on y-o-y basis to 31.0 paisa per MB.
In comparison, the non data VAS revenue as a percent of service revenue has fallen to 7.4 percent, drop of 2.8 percent contribution over the year. That’s why Idea Cellular is concerned about OTT apps that are thriving in India.
With increasing proportion of rural subscribers, the seasonal slowdown in the second quarter has become more pronounced resulting in sharp contraction in the Voice Minutes of Use by 5.8 percent to 138.8 billion minutes compared to 147.3 billion minutes in Q1FY14.
The VAS contribution also increased to 16.1 percent (15.6 percent in Q2FY13) further improving overall ARPM.
Baburajan K
editor@telecomlead.com
