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Drive VAS for telecom revenue growth: IBM study

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CIOL Bureau
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MUMBAI, INDIA: IBM Global Business Services’ new study titled ‘Be Smart, Drives’ finds that enhancing data and related revenue from value-added service (VAS) is a key step to address the imminent loss caused by falling average revenue per user (ARPU) and growing subscriber churn.

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About 80 per cent of Indian operators’ revenues are generated from voice; however, the competition in the telecom sector has substantially increased causing a negative impact on the voice ARPUs. 

According to Amar Vaidya, IBM Global Business Services’ vice president and industry head - Telecommunications, the telecom growth is largely due to gross number of subscribers but it is not actually increasing the revenue.

“However, adopting strategies for VAS can have a multiplier effect to grow the non-voice revenues than the voice revenues,” Vaidya says.

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According to current projections of subscriber growth rate, a revenue opportunity of Rs 21,000 crore arises, if ARPU can be kept constant versus its actual decline until 2014.

However, if the declining ARPU trend is not arrested, the industry stands to lose significant revenue in the market, the study reveals. Currently, data revenues form only about 15 per cent of the service provider’s gross and the rest is voice-based revenue.

Though VAS is growing at 48 per cent compound rate, it is largely SMS based because operators are using SMS as a main platform of delivery for various VAS offerings, Vaidya points out. 

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Also read: TRAI to introduce framework for VAS providers 

Interestingly, the dropping ARPU trend is not impacted by the current levels of VAS adoption or offerings. It indicates a compelling need for increasing VAS demand by customers and scope of expanding VAS offerings.

In order to monetize VAS offerings and grow revenues, teleos need to focus on four key areas — content, commerce, collaboration and capability, the study predicts. 

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VAS content needs to be developed and created based on customer data and profile, which allows distinctive adoption for driving segment-related personalize services. Market skills and tools should be used for targeting potential customers and its engagement for offerings.

Based on the content, its monetization or revenue model needs to be developed, where a common scalable and flexible payment infrastructure is made available to customer for choice in pricing as well as payment mechanisms.

The telcos need to innovative by collaborating with partners to enhance customer experiences involving multiple value-chain players. They also need to develop cross-industry collaboration on common standards and metrics that helps in revenue sharing models and reduces risk of the value chain partners.

Lastly, the study stresses on developing capability in product portfolio management. The telcos need to identify agile delivery platform for anytime, anywhere services offerings and set a single view of customers across platforms using advancing analytics and integrating data across organizational silos.

In doing so, telcos need to build cross offering campaign management and reporting tools for forecasting, sales, delivery and reporting for management monitoring.

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