Messaging & Voice App Nimbuzz In Talks With Telecom Operators To Offer Cheap International Calls. Challenges Ahead?

Nimbuzz is in talks with some new Indian telecom operators to launch a co-branded application that would offer international calling at subsidized rates.

Mobile messaging apps hacked

Mobile messaging apps hacked

Messaging apps are actively working on to provide cheap voice calling features and thereby increase revenues. Nimbuzz, the free messaging app which has been known for its voice calling feature is now in talks with new Indian telecom operators to provide international calling at subsidized rates.

Set to increase the global foot print of Nimbuzz, the new alliance will also witness the messaging company developing a co-branded app that would provide the new feature.

According to CEO Vikas Saxena the company is not talking to the telecom giants such as Airtel or Idea and would release further details by the end of Q1 2014. The deal would also be offering VOIP based calling and IM services to it’s partnering telcos’ customers.

The company that last claimed to have 200 million registered users worldwide in 2013, attracts 24 million from India. According to its CEO Nimbuzz is among the larger players in the VoIP-based international calling segment and further added that 2014 would see the company doubling in terms of revenues.

In fact last year the company had joined hands with internet service provider Spectranet to enable Nimbuzz users to make international calls at prices starting 1 paise/second. Since international calling contributes 30%  of the company’s overall revenues, Saxena plans to announce more such partnerships in the coming months.

Two big challenges for Nimbuzz right away – Indian Telcos and WhatsApp

The first biggest challenge that Nimbuzz is going to face or for that matter every other messaging app in the country would face is from the telco giants such as Airtel, Vodafone and Idea.

India’s international long distance calling market is estimated to be around $1 billion, including both inbound and outbound calling. Subsequently it is a known fact that messaging apps are gradually eating up revenues of the telcos globally.

A latest report from Ovum predicted that the shares of messaging apps are growing to go big and hit the telecos severely. According to a study, global telecom companies will lose $386 billion between 2012 and 2018 from customers using over-the-top VoIP (voice over Internet Protocol) solutions such as Skype and Microsoft Lync. These losses will be mostly from international call revenues and roaming services. The companies lost $32.5 billion in texting fees in 2013 and the figure is projected to reach $54 billion by 2016.

Voice calls and text messages (SMS) comprise about 75 percent of the revenues of telecom operators in India. But cheap and fun messaging provided by messaging apps have snatched the revenues from the operators in the SMS market. While SMS comprised 12% of profit for Bharti Airtel in 2009-10, in Q3FY14, SMS revenues were down to a mere 6% of top line.

We have already begun to see operators demanding for a framework or regulations for messaging and voice apps in the country. Recently Bharti Airtel CEO Gopal Vittal had asked the Telecom Regulatory Authority of India (TRAI) to regulate messaging apps.

However, the request has been set aside by TRAI saying that the government has the powers to set regulations and the messaging apps in the country are following all guidelines in the country. This might come as a respite to Nimbuzz but going further operators will lobby the government to save their pie of the revenue being snatched by apps like Nimbuzz.

The second big challenge Nimbuzz can see coming its way is from the world’s most popular messaging app WhatsApp. The messaging app has announced that it is now venturing into providing cheap voice based services soon after getting acquired from Facebook for $19 billion.

While Nimbuzz has 24 million registered users from India, WhatsApp recently revealed that it has 40 million active users and is looking to touch a billion by end of 2014.

India is a big market for WhatsApp especially when it is the most popular messaging app in the country while the country is witnessing a proliferating madness in the import of smartphones.

Not only WhatsApp, Viber which was recently acquired by Rakuten for $900M sees India as a big market for a messaging and voice based apps. The company recently shared that out of its 16 million registered user base in India 4 million are active.

In 2014, Saxena wants Nimbuzz to be the second messaging and voice based player in the country after WhatsApp. The company may not have an easy ride and might feel the heat from the likes of Hike, WeChat, Line, Viber and Mxit.