With SMS revenue slowing to a trickle under the onslaught of instant messengers, telecom operators have begun to consider offering it in vernacular languages or bundled with data in a bid to keep alive a service that at one time was among the cheapest modes of communication.
While a large chunk of the SMS revenue has fallen due to the advent of applications such as Whatsapp, Facebook and others, telecom service providers feel that the massive Indian populace in rural areas would still prefer to use the mainstream messaging platform rather than more expensive data from the word go.
"There are 300 million people yet to get connected, who will use SMS as a primary means of sending messages. So, even though SMS usage is declining, it will not go away completely in a market like India," said Rajan Mathews, director general of the Cellular Operators Association of India, the lobby group representing GSM operators including Bharti Airtel, Vodafone India and Idea Cellular.
According to UK-based research firm Ovum, Indian telcos have lost an estimated $1.2 billion in potential revenue from SMS and value-added services in 2013 because of the arrival of social media messaging services. It estimates this to widen to $1.56 billion this year, $2.2 billion in 2015 and $3.1 billion the year after that.
"The market leaders have felt the biggest impact, Airtel and Vodafone. However, the revenue that has been generated from the sale of mobile broadband (bought specifically for the chat apps) has more than compensated for the loss in SMS revenue," Neha Dharia, senior analyst focusing on consumer services at Ovum, told ET.
SMS revenue as part of non-voice revenue, including value-added services, for Bharti Airtel fell to 5.4% in the quarter ended September 2014, from 6.7% in the same three-month period last year. Income from non-voice services, essentially from offering data, rose in the same period to 20.2% of total revenue from 16.4%. Vodafone India, which has also seen its data revenue jump, said SMS revenue was never a significant portion of overall revenue.