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As the Indian telephony market graduates to 3G and moves from smartphones to entertainment phones, the convergence between telecom and media is likely to further push the demand for value-added services (VAS). Already, cutthroat competition in the telecom space has made value addition mandatory and a key strategy for operators as end-users look beyond mere voice services.

"Currently, VAS contributes 10-13 per cent of the revenues of a service provider. By 2013, we expect it to grow to 21 per cent," says Kunal Bajaj, managing director, BDA Connect.

With features like messaging, radio, mobile blogging and social networking on mobiles picking up following the launch of devices such as Apple's iPhone and Research In Motion's BlackBerry Bold, service providers expect the demand for VAS to rise and are increasingly banking on it to bring in additional revenues. Mcommerce is another service, which though still at a nascent stage, will pick up once 3G services are rolled out.

For VAS providers, India's rapidly growing telecom market holds a lot of promise. Currently valued at Rs 65 billion, the VAS market is expected to increase manifold once 3G services are rolled out. Some industry estimates predict that the market will touch Rs 200 billion by 2015.

The major VAS players in India include Mauj Telecom, OnMobile, Mobile2win, Cellebrum, One97 Communications, IMImobile and Roamware. The revenue of each of these players is anywhere between Rs 250 million and Rs 2.5 billion. Riding on the IT and telecom boom in the country, these companies also have multi-million dollar funding coming their way. Little wonder therefore, that these companies are scaling up operations and aggressively consolidating and building their technology platforms.

tele.net takes a look at some of the major VAS players in the country, their performance so far and future plans...

Mobile2win
Mobile2win, set up in 2003, has grown considerably today. It recently tied up with Altruist Technologies, making the coMbined entity the fourth largest mobile VAS company in India in revenue terms, according to company officials. (Mobile2win's revenue stood at Rs 350 million and Altruist's at Rs 1.65 billion in financial year 2007-08.)

While the details of the share-swap deal have not been disclosed, it has been reported that Mobile2win's investors –­ Norwest Venture Partners, Nexus India Capital, Softbank China and Silicon Valley Bank –­ will get shares in Altruist, while Altruist's co-founders, brothers Dheeraj and Anuj Aggarwal, will get a stake in Mobile2win.

So far, the company has been focusing on what it calls "lifestyle applications" –­ mobile yoga instructions, food recipes and religious teachings. According to Rajiv Hiranandani, country head, Mobile2win, the company was tapping the traditionally non-downloading audience and this strategy has been working well for them.

By signing this deal with Altruist, Mobile2win has expanded its service portfolio to include voiceand web-based VAS along with interactive communication solutions specially designed for carriers, wireless application service providers, internet service providers, content service providers and corporate clients. "We don't have voice and they don't have SMS and WAP offerings, so we complement each other. Voice companies are bigger due to their width and the transactional nature of the business," notes Hiranandani.

Mobile2win has a clientele of over 120 brands with which it has worked for short code advertising and other campaigns. The company expects most of these brands to migrate to more engaging advertising on the mobile through platforms including branded gaming, in-game advertising, wrap-around video ads and ad-supported content.

In terms of new products and services, Hiranandani states, "Several of our existing verticals are becoming crowded. We segment our businesses as mobile marketing and advertising –­ which is in its infancy –­ and media (services) and telecom operator (subscription services), which are currently driving growth and margins. We also plan to introduce location-based services on SMS, voice and WAP."

Currently, the company has 80-85 eMployees, while Altruist has 300-350 employees. In the future, with the arrival of 3G, Hiranandani expects VAS to play an even bigger role in the Indian telecom space. He expects that multi-player games in the passive category (like chess) and the active category (like tennis, cricket, soccer) will arrive in India with 3G.

Mauj Telecom
Mauj Telecom is a telecom solutions company offering services in three fast growing areas –­ computing (devices and software), telecom and new media, representing digital entertainment. Incorporated in 2003, it is a specialist in gaming.

Witnessing near 100 per cent year-onyear growth, the company has expanded rapidly over the past six years. Today, it employs over 150 people and has offices in India, Dubai, London and New York.

According to Manoj Dewane, chief executive officer, Mauj Telecom, the coMpany's strength lies in the fact that it has successfully understood the role of a service aggregator, even before the company could get to any other part of the mobile VAS value chain. "It is important because the content is not made for mobile. It is content for the TV screen, which has to be adapted for the mobile screen. This is where the science of aggregation comes in. Similarly, each application that an operator runs –­ like a caller ringback tone (CRBT) or a missed call alert –­ has its own specifications," says Dewane.

Mauj also manages entire platforms for operators. At the moment, it runs five to six platforms across the world, where it undertakes everything from content aggregation and repurposing to platform management and digital rights management.

On the mobile music front as well, Mauj is an active player. Given that mobile music is a key driver of VAS revenues with close to 400,000 ringtones being downloaded every day, Mauj is looking at a bigger role in this space. "We also play a part in content ownership. We have a part in Eros, in Echo Music and Mauj Music (our venture with Shamir Tandon); so we are a strong player in this space," notes Dewane.

Recently, the company has tied up with FM radio channel Radio City. Mauj will power all mobile activities of Radio City. The deal is for two years. It includes Mauj managing the 57007 short code mobile service of Radio City, through which the audience can take part in various contests and programmes. Mauj will also be building and managing a comprehensive WAP site for accessing mobile content.

Mauj has its sights set on tapping the Middle East and Africa to further its overseas growth plans. It sees tremendous potential in these regions. The other focus of the company is to step up mobile marketing including both advertising and campaign management. The company is also awaiting the launch of 3G and is looking forward to a market for 3G applications. "With the advent of 3G technology, the mobile gaming and music industry should grow by leaps and bounds. Already, nearly 35 per cent of our games, and our top-end applications are downloaded in B and C class towns, where there's no FM, erratic electricity and no multiplex," says Dewane.

Meanwhile, Mauj has aggressive plans to penetrate into the rural areas with a holistic range of offerings suited for specific territories. It already has a market for devotional content and will now leverage its key partnerships in the southern markets for providing film-based content. Mauj has also created Marathi and Bhojpuri content for rural subscribers.

IMImobile
Hyderabad-based VAS infrastructure and services provider IMImobile was founded in 1999 by Vishwanath Alluri, and has since emerged as a key player in the Indian VAS space.

Within a year of starting operations, the company raised $1 million in funding. In 2005, it raised about $3 million from NewMedia Spark plc, a UK-based venture capital fund, for the expansion of local development teams, its research and development unit, and for overseas expansion. In 2006, it raised another $10 million from Pequot Ventures. The nineyear-old company employs over 320 people (as of 2008) worldwide, of which 220 work out of its VAS Network Operations Centre in Hyderabad.

The company has recently set up a convergence lab in Hyderabad at an investment of $1 million. The lab will develop 3gand 4G-related innovations and create a live environment for Indian operators. It already has a convergence lab in Mauritius.

While the company does not create content, it has built various content management and delivery platforms that have been tested globally in live deployments. These include carrier-grade messaging platforms (SMS centre, MMS centre), messaging gateways (MMS, SMS, USSD and WAP), a service delivery platform (SDP) and content management system (DaVinci SDP) and a host of client and server-side applications and content. The company also has a range of voice platforms (interactive voice response [IVR], voicemail and CRBT).

The company currently derives 60 per cent of its revenue from voice and WAP services, while 15 per cent flows in from licence sales. The company expects its mobile advertising business to contribute 20 per cent to its revenues by 2010.

While tier II cities of Kerala, Tamil Nadu, Andhra Pradesh and Karnataka are the leading markets for IMImobile, it is ramping up its presence in Uttar Pradesh, Punjab, Gujarat and, to an extent, in Maharashtra. The company's clients in India include mobile operators like Bharti Airtel, Reliance Communications (RCOM), Bharat Sanchar Nigam Limited (BSNL), Aircel, Vodafone Essar and Idea Cellular. It has also partnered with Yahoo!, Google and StarTV.

Also active in overseas markets, in November 2008, IMImobile acquired dx3, a London-based digital content delivery service provider. Already present in 40 countries across Asia, Africa, Latin America and the Middle East, IMI's acquisition of dx3 has marked the first step in the expansion plans for Europe.

In February 2009, IMImobile took control of the Music2You (M2Y) service earlier provided by Nokia Siemens Networks. According to Alluri, CEO, IMImobile, "The company will fully capitalise on the synergies between M2Y and dx3."

OnMobile
OnMobile, set up by Infosys Technologies in 2000, started offering services only in 2002. In the early days, the company offered voice-based applications such as IVR, contests and ringtones, but has since expanded into data services.

The company now offers turnkey solutions including platforms, applications, content and professional services to deploy and operate VAS for telecom operators, media houses and content providers. Its key clients include Bharti Airtel, Vodafone Essar, Idea, BSNL, Singapore Telecommunications (SingTel), RCOM and Mahanagar Telephone Nigam Limited (MTNL).

Headquartered in Bangalore with offices in Singapore and Sydney, the coMpany launched its initial public offering (IPO) in February 2008. The 10.9 million equity share IPO was oversubscribed nearly 11 times. The issue received bids for over 119 million shares against 10.9 million on offer. The price per share was fixed in the Rs 425-Rs 450 band. The company had earlier also raised around $30 million through a pre-IPO placement. George Soros's Quantum Fund, Bessemer India Capital and Wardferry India Reconnaissance Fund picked up 3.54 per cent, 0.9 per cent and 0.95 per cent stake respectively.

In 2001 too, OnMobile had raised about $18 million from Argo Global Capital Partners, whose investors include France Telecom, Deutsche Telekom and SingTel. In October 2006, Deutsche Bank, Goldman Sachs and Polygon Investment Partners invested $27.8 million in the company. The funds were used for expansion.

The company has recently bagged a large contract from the Vodafone Group, which has selected OnMobile to provide music and entertainment solutions to its customers across 30 countries.

The company was the first to launch a comprehensive language model for the Indian market. Its automatic speech recogniser (ASR) technology for Indian languages enables users to interact with automated services with simple voice commands in their native languages.

In July 2008, OnMobile Global acquired speech recognition company Telisma for 11 million euro. The acquisition was made to gain access to Telisma's technology. It was funded by money raised from OnMobile's IPO, as well as from internal accruals.

In September 2007, the company acquired the French telecom software company Voxmobili for Rs 1.5 billion. This acquisition enabled OnMobile to expand its portfolio, which had so far focused primarily on voice-based VAS products, to also include VAS data products. The acquisition also gave OnMobile a springboard into Europe and North America, where Voxmobili's customers include big names like Orange Communications SA, tMobile International AG, the Vodafone Group and AT&T.

Voxmobili is OnMobile's second acquisition after ITFinity Solutions, which it bought in December 2006 with funding from Deutsche Bank, Goldman Sachs and Polygon Investment Partners.

OnMobile expects international customers to contribute 25 per cent of its revenue in 2008-09 compared with 15 per cent in 2007-08. The company reported revenues of Rs 2.7 billion in 2007-08.

Cellebrum
Incorporated in 2000, Spice Group coMpany Cellebrum has emerged as a key VAS player in India. Its extensive product portfolio is designed to cater to the needs of multi-cultural and multilingual subscribers. The company claims to have more than 140,000 songs on offer in more than 17 languages, as well as logos, wallpapers and 12,000 ringtones.

Its product portfolio comprises VAS applications like mobile radio, social networking, content uploading, mobile advertising, background music, select caller list, voicemail, SMSs, global nuMber, USSD, international callback, missed call alerts, etc. Its voice-based services include technologies like R2 signalling, ISDN signalling, SS7, IVRS, ASR and text-to-speech. Its data-based services include technologies like SMS, USSD, WAP and GPRS.

The company's client portfolio in India is diverse and covers verticals such as telecom, media and entertainment, transportation and banking. Its key clients include Bharti Airtel, BSNL, Vodafone Essar, Aaj Tak, Dainik Jagran, Air India, ICICI Bank and ABN Amro.

For content delivery, the company has entered into several industry alliances. In order to develop and provide its various services and applications, Cellebrum has partnered with companies like Intel, Parity Software, Jataayu, ScanSoft and NMS Communications.

Cellebrum is on an expansion drive. It plans to add three new development centres in the US, Europe and the Middle East. The agenda is simple –­ to enhance its presence in the global VAS space. The company also hopes to leverage upcoming 3G services. Company officials feel that once 3G services are launched, social networking, blogging on mobile will become more popular. With the radio becoming personalised, the mobile phone can become the "poor man's iPod".

One97 Communications
Launched in December 2000, One97 Communications has carved a niche for itself in the Indian VAS space. It is the first VAS operator to have forayed into the untapped rural segment. Its product portfolio caters primarily to the media, entertainment and telecom segments.

For instance, One97 provides its platform to Zee News, enabling the TV channel to reach its viewers in accordance with its profile, demography, age, pricing and languages.

One97 views the rural segment as a key growth area. Company officials are of the view that the focus of rural expansion has to be on services that enable the rural population to access infotainment content and updates on local utilities in regional languages. The company is planning to focus on voice applications. It has recently developed and deployed VAS for the Airtel IFFCO Kisan Sanchar Project to connect farmers by launching their "Dakia" service.

The company has also chalked out ambitious expansion plans, not only in the domestic market but also overseas. It will pursue inorganic growth options in markets like Bangladesh, Indonesia and Africa. Moreover, New York-based video ringtone customisation service provider Vringo has formed an alliance with One97 to offer the Vringo video application service in India.

One97's growth plans are fuelled by funding from various investors. For instance, Intel Capital has announced investments totalling $23 million for three companies –­ One97 Communications, IndiaMART and Global Talent Track. Global Talent Track provides shortand long-term vocational training courses and powers the platform for the same. Prior to this, One97 had raised around $8-$10 million in funding from SAIF Partners and Silicon Valley Bank. Investors from the first round participated in this one too.

One97 is looking to touch $100 million in terms of revenue by fiscal year 2009-10. With a fresh lease of funding from Intel Capital (in spite of the recession), the VAS player intends to invest in increasing its headcount from 700 to 1,000 by the end of this year.