The managed services model adoption enabled MNO’s to reduce cost, increase efficiency and streamline number of vendors but with trade-offs’. It attached another ecosystem player in service delivery framework and created disconnect between MNO’s product team and VAS solution providers. In order to even execute proof of concept, the VAS players need to undergo multiple interactions at different levels in the MNO’s ecosystem that delays the integration process. With low revenue share model, it is getting extremely difficult for VAS players to maintain healthy cash flow and invest heavily on innovative product line.
The negative growth forced MNO’s to focus on newly built data network to compensate the lost revenue on the messaging and other VAS services. The move also impacted many home grown small MVAS vendor to focus on voice and text based product portfolio’s and forced many to restructure their product or business model.
It is observed that with the dynamic changing competitive environment within MVAS segment; the leaders started expansion in high margin and profitable geographies to mitigate negative growth challenge in India. Carrying intense expertise to deploy their services in a very competitive and technologically complex environment, the Indian MVAS players gained major customers in Europe, Latin America and MENA. The potential customers are also happy as the products are well tested, low priced and carry potential to attract new and retain existing customer base. OnMobile RBT, Comviva mCommerce, IMIMobile Platform, Hungama Music portal, CanvasM device testing lab environment are some of the example and the international segment revenue growth of listed companies are self-explanatory.
In MVAS ecosystem, the content owner, publisher, aggregators, technology enablers share 30-35% of the total generated revenue. The fall in revenue share, dynamic competitive scenario forced MVAS provider to create or own E2E ecosystem to maintain and grow revenue, userbase and to manage healthy RoI, TCO, TCA through increase Total and addressable market size.
It is expected that growth in competition in MVAS ecosystem, reduction in revenue, revenue share and fall in user base would trigger consolidation in next few quarters. Many of the MVAS player’s valuations are at attractive level compared to international peers for many domestic and global technology giants.
In conclusion, Indian MVAS solution providers’ strategy to target developed and developing countries to increase their revenue base would evolve them into more E2E MVAS player. The evolving Billion $ industry is going to attract international cash rich technology giants to opt for M&A in the segment to gain the direct access of opportunity filled Indian mobile segment. The M&A in MVAS solution provider segment is inevitable
