I contributed in the Egypt part as professional expert.

1. Mobile VAS in Emerging Markets - India and Egypt
Aandal Margabanthu
Information & Communication Technologies
2,November 2011
Frost & Sullivan’s Growth Consulting can assist with your growth strategies

2. Today’s Presenters
Aandal Margabanthu, Research Associate,
Information & Communication Technologies,
Frost & Sullivan
2

3. Focus Points
Agenda
Introduction
Market Definitions and Product Segmentation
Why MVAS?
Explosive Growth in Mobile Subscribers
Scope of the Study
Drivers and Restraints for Mobile VAS Market
India VAS Market
Egypt VAS Market
Increasing VAS Penetration
Growth in VAS Revenues
Analysis of Popular VAS Segments
Prevalent Business Models
Revenue Sharing Model
New Opportunities
Strategic Conclusions
3

4. Introduction
4

5. Market Definition and Product Segmentation
Mobile Value Added Services as those services that offer differentiation for operators and also allows them
to charge a premium price. It includes Non voice services such as SMS ( P2P,P2A etc), MMS, RBT , data
services like the ones using GPRS, WLAN, 3G etc and other WAP,IVR,IVVR and USSD based services.
Product Segmentation
Value Added
Services
Messaging Non SMS Services
(P2P/P2A/A2P)
Ring Back Data Voice/IVR Video/USSD
Tones Services /etc
5

6. Why MVAS?
Falling Voice ARPU Proliferation
and reducing of Smartphone
operator’s margins and Smart devices
Explosive Evolving
growth of end user
Mobile Subscribers preferences
Importance
of MVAS
Mobile phone has transcended from simple communication tool to an all-powerful
infotainment and utility tool
Mobile operators are shifting from Voice to Value Added and Data
Services
6

7. Explosive Growth in the Wireless Subscribers
Mobile Subscribe rs Grow th
CAGR (Egypt): 5.31%
2000
CAGR (India): 8.9% 1467.5
1500
s )
Sbci e ( n
us rbr m
822.9
1000
500
0
2010 2017
Source : Frost & Sullivan
India Egypt
• The Indian and Egyptian markets have been witnessing an explosive growth in the subscriber base in the
recent years due to increased affordability and innovative and price competitive services offered
• Another reason is the availability of cheap handsets with enhanced features like 3G support etc
• Voice services still corresponds to about 80% of the operators revenues but there is an increase in data
usage in India and Egypt
• The ARPU will continue to decline in the both the countries
7

8. Scope of the Study
The study provides comprehensive insights into the emerging Mobile VAS markets of India
and Egypt. It includes detailed analyses on the following
• Growth in the Wireless Market with Subscriber, ARPU and Revenue Forecasts
• Key Trends, Drivers and Restraints for the MVAS Market
• VAS subscribers, penetration, ARPU and Revenue
• Analysis of Value Added Services (Messaging, Premium Content, RBT, Data etc) and
VAS platforms (SMS, IVR, WAP etc) including forecasts and revenues
• Distribution and Revenue Share Models
• New Opportunities in VAS
• Competitive Intelligence including market share by operators and key vendor profiling
8

9. Drivers and Restraints for the Mobile VAS Market
9

10. India VAS Market
MVAS Market: Key Market Drivers and Restraints (India), 2010-2017
1-2 years 3-5 years 5-7 years
Availability of feature rich Smartphones and feature
phones at an affordable price range High High High
Market Drivers
Launch of 3G services in late 2010 and impending Medium High High
launch of LTE in 2012 will increase the data usage
Availability of customer centric, vernacular Medium Medium High
information that can cater to the needs of all
segments
Medium Medium Medium
Differentiation and Revenue Generation
tool for Operators
Medium Medium Medium
Regulatory Constraints for enabling VAS
Market Restraints
Lack of transparent VAS pricing scheme High Medium Medium
High High Medium
Underdeveloped mobile internet ecosystem with
irregularities in connectivity ,billing etc
Source: Frost & Sullivan analysis
10

11. Egypt VAS Market
MVAS Market: Key Market Drivers and Restraints (Egypt), 2010-2017
1-2 years 3-4 years 5-7 years
Relaxation in Government Regulations Medium High High
Market Drivers
Availability of high speed data services at affordable
prices Medium High High
Increased Availability of innovative Apps Medium High Medium
and Services in the market
Differentiation and revenue generation Low Medium High
tool for operators amid declining voice
revenues
Unstable Socio Economic Scenario in High Medium Low
the country
Market Restraints
Poor Smartphone penetration owing high High Medium Low
pricing and low disposable income levels
High Pricing of VAS services High Medium Low
Lack of Awareness among end users about VAS
Medium Low Low
services available in the market
Absence of a transparent revenue sharing model between
Medium Low Low
service providers and VAS vendors
Source: Frost & Sullivan analysis
11

12. Increasing VAS penetration
The VAS subscribers in India and Egypt are likely to increase at a CAGR of 14.5% to reach
865.54 million by 2017, a majority of whom will be from India
VAS penetration in India as of June 2011 was 52.5% of the
actual subscribers
VAS penetration in India is likely to reach 85% of the actual
subscribers by end of CY 2017
Egypt had a VAS penetration of 77% as of June 2011
VAS penetration in Egypt is likely to reach 92% by Dec 2017
Note: Actual subscribers are calculated after reducing the number of multi SIM subscribers. Active subscribers are the total number of VLR subscribers
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13. Growth in VAS Revenues
VAS Re ve nue s
3.8
35
Rv n e ( S b l o )
e e u sU D i i n
30
l
25
20
15 28
10
0.53
5
2.67
0
2010 2017 Source : Frost & Sullivan
India Egypt
• VAS and Data will become a USD 28 billion industry in India by 2017
• Egyptian VAS revenues are likely to reach USD 3.8 billion by 2017
• VAS and Data will contribute to more than 50% of the overall operator’s revenues in both the countries
13

14. Analysis of Popular VAS Segments
SMS(P2P)
• P2P SMS in India had an actual subscriber penetration of 50% in 2010 and contributed to about 30% of the overall
VAS revenues
• As of June 2011, more than 50% of the overall wireless subscribers in Egypt used P2P SMS
CRBT
• In India CRBT had a penetration of 30% in 2010 and it contributed to 23% of the overall VAS revenues
• Around 29% of the overall wireless subscribers used RBT and CRBT as of June 2011 in Egypt
Premium Content and Services
• 20% of the actual subscribers in India use Premium content including ring tones, music downloads, games, premium
SMS, contents etc as of 2010
• Around 24% of the overall subscribers as of June 2011 used premium content and services in Egypt
Mobile Broadband
• Mobile Broadband will be preferred broadband access technology in both the countries
• In India the number of end users using mobile broadband on handsets is slated to increase at a CAGR of 93%(2010-
2017)
• Wireless broadband adoption in Egypt is slated to increase at a CAGR of 17.2%(2010-2017)
14

15. Prevalent Business Models
Off Deck(D2C)
Handset (Mobile Broadband)
Manufacturer
On Deck
Content Technology
Content Owner Operators End Users
Aggregator Enabler
Off Deck(D2C)
(Mobile Broadband/ Retail outlets)
Operator based or On Deck model is the most common business model in these countries. Off Deck
or Direct to Customer model has not gained much popularity or adoption
15

16. Revenue Sharing Model
India Egypt
Content Owner
• Content Owner retains 5-
10% of revenue • Presently there is no
• Content Aggregator retains transparent revenue Sharing
Content Aggregator
10-15% revenue model between Operators and
• Technology enabler VAS Vendors in Egypt.
(Managed VAS Vendor) Technology Enabler • Operator’s share of revenue
Retains 10-20 % of (Service Delivery
Platform Provider)
ranges between 50% and 70%
Revenue
while rest of the revenue is
• Mobile operator gets the
shared between content
rest of revenue i.e. around Network Operator
60-80 % provider, content aggregator
and technology enabler
End User
16

17. New Opportunities
Mobile Broadband Applications
• VoIP
• Video application including video on
demand and live TV
• Social Networking apps including multi-
user gaming etc
Utility Applications Transactional and Commerce
• Mobile Health Application
• Mobile Education • Mobile Banking: A precursor to financial
Future VAS
• Mobile Agriculture inclusion
Offerings
• Mobile Governance • Mobile Commerce (SMS/USSD/WAP)
• Disaster management/alerts • NFC related mobile payments and
• Emergency alerts transaction
Location Based applications
• Navigation application
• Fleet/Work Force Tracker
• Location based advertisements/alerts/information including
weather/traffic updates
Source : Frost & Sullivan
• Location based coupons and deals from operators/vendors
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18. Strategic Conclusions
18

19. Key Takeaways (India)
Increasing Smartphone penetration and
1 usage of data services on the mobile will
drive the VAS market ahead
Top VAS revenue grossers like SMS and
2 CRBT will be replaced by other services like
data etc in the study period
The focus of the operators will move from
voice to data in the near future. VAS will be a
3 revenue generation and brand differentiation
tool
Increasing focus on m-commerce, utility
application like m-Health, m- Education etc
4 will help in achieving inclusive growth in the
country
Mobile broadband and adoption of off deck
5 vale added services will bring forth a revised
and equitable revenue share model
19

20. Key Takeaways (Egypt)
Growing wireless market represents a huge
1 opportunity for VAS players in Egypt
High literacy rate of the target population will
2 help in industry growth
Operators are focusing on increasing
3 strategic alliances with ISPs, banks, vendors
and global platform providers
3G infrastructure upgrades and increased
affordability due to subsequent price
4 rationing provide great growth opportunities
for VAS in the country
Key to the success lies in providing
5 innovative utility services at attractive prices
20

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24. For Additional Information
Caroline Lewis Aandal Margabanthu
Corporate Communications Research Associate
91.022.6607 2000 Information & Communication
Caroline.lewis@frost.com Technology Practice
AandalM@frost.com
Abhishek Chauhan
Deepshri Iyer Senior Consultant
Corporate Communications Information & Communication
91.022.6607 2000 Technology Practice
deepshrii@frost.com abhishekc1@frost.com
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