Impending threat to Video Centric Mobile Applications - More player's than User base

Indian economic directions and subsequent entry by players are generally dominated by one successful use case. In India, most of the companies hesitate to take the first step whereas the case is just reversed when it comes to other developed companies. That is the reason that being one of the greatest mind aggregator, Indian companies always act as service providers instead of owner of product or services or applications or be it anything else.

With the ongoing revolution underway in Telecom sector and slow death of Telecom operator centric Mobile VAS segment due to very stringent regulatory guideline in India; many VAS companies moved into Applications or platform or service category to survive. Reliance Jio, helped the ecosystem with a hope that India will be the market of data user and data centric products or applications or games or anything else will get adopted like forest fire.

Indians are generally fond of music, movies and cricket. The fall of MVAS business at operator level prompted major players like Hungama and Saavn to quickly change their strategy and moved into Application based content delivery through Device manufacturing delivery. Hungama even went one step further an launched their movie based applications. The slight success of both the player brought in number of players like Sony, Zee, Star, VIU, Eros and many more. Ironically, most of them went with open wallet and acquired user through heavy promotional activities instead of organic growth. Indian Telecom sector with Data ARPU of less than $2.25 in best case scenario trumped most of them as their content adoption went high for free content or till the offer period whereas they failed to get the expected growth rate for the paid userbase. I do agree that Indian Smartphone segment is growing but at the same time the mindset of the end user is to access default Video application YouTube.

In my point of view, the video applications player should come out with disruptive engagement model with end user wherein user start paying for the content instead of relying on advertisement which is not long term option

India 4G Road map - Invest in On mobile Global with long Term Horizon

On mobile Global is one of the major players in Indian Mobile VAS ecosystem with strong presence across different geographies. Post MVAS regulation implementation in India during 2011-12, most of the Mobile Value Added Company underwent major shock wave and tried hard to cover themselves from direct and indirect impact. The Listed On mobile Global equity price went through major hammering. Investor also lost their confidence in Company Compliance which led to major CXO level exist.

On mobile Global during 2014, called as major laggard in Indian equity market when its price even went to INR 28 to 29 ranges. By Early 2015, management started putting all the building blocks of their product line and kept their focus on Ring back tone which helped them to gain Telephonic business in Europe to Americas whereas gain business from Airtel Africa unit. Management also managed to sell non performing business unit and invested the same in data centric business to offer data centric service, platform to B2B and B2C. It is expected that their investment in content procurement is going to bring fruit with the higher adoption by end consumer post data price war start between Incumbent Mobile Service Provider and Reliance Jio.

The equity price started recovering and by the end of 2015, On mobile Global equity gave excellent return to its investors. Currently the equity price is hovering between INR 115 to INR 124 and company is relying heavily on fully fledged adoption of 4G network by the end user. Most of On mobile global competitor changed their strategy and moved into the Application segment whereas On mobile global invested heavily on the platform side which kept their differentiation in the marketplace.

In my point of view, the dividend paying company as well as active share buyback on regular interval helped On mobile global to regain their investor confidence. I will not be surprised in a scenario, On mobile give further 50% return in next 12 month given the dynamics of Telecom sector in geographies they are operating.

In my point of view, retail investor should think of buying the equity on delivery basis rather than F&O basis to be on the safer side.

Disclaimer; I invested in Onmobile Global and advise reader or potential investor's to consult their financial advisor before investing

Indian Wireless MVAS Activation Experiencing Negative Growth – No Place To Hide

Indian MVAS sector experienced major roadblock post MVAS regulation enforcement by TRAI. The purpose of TRAI was to control MVAS centric complaint. The growth of MVAS attracted many service providers to launch slew of MVAS products with loosely coupled consumer management. The lack of QoS attached with product monitoring on the delivery, billing, activation and deactivation pushed consumer and prosumer initiated complaint against service providers for billing and deactivation issues. The MVAS regulation enforcement started impacting MVAS revenue and in FY 12-13, Indian wireless operator experienced MVAS revenue share going down from by 2% point. The second wave of amendment by TRAI which included double consent and subsequent enforcement of the same drastically impacted MVAS service activation. As per TRAI report, MVAS activation falls down from monthly 69million in June 2013 to 29.8 & 27.65 million in July & Aug, 2013 respectively. The unprecedented MoM fall of MVAS activation de-growth of 58% & 7% respectively indicate nothing but serious danger poised to explode. It is evident that Indian wireless operator for just concluded July-Sept 2013 will experience huge fall in MVAS revenue and thus low or nil overall revenue growth. In my point of view, the MVAS solution providers must focus on innovation vs. replication to offer cost effective product line ups.