WhatsApp, WeChat set for revenue bonanza

2015-09-30 07:28 - Duncan Alfreds, Fin24
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MTN looking to tap into Africa's smartphone usage.



Cape Town – Over the top (OTT) voice providers are set for a massive increase in revenue, but will also face challenges, a research paper has suggested.

Data from Juniper research has revealed that providers such as WhatsApp and Skype could see a jump in revenue to $10bn as they grab a larger share of OTT traffic.

Juniper’s paper titled 'Future Voice Strategies: mVoIP, Carrier OTT, WebRTC, HD Voice & Video Calling 2015-2020', found that the increase represents a five-fold jump in earnings as higher speed mobile networks facilitate access.

OTT services have disrupted mobile network business models and grabbed an increasing slice of traffic. However, their revenue models have yet to mature.

Despite social media giant Facebook paying $19bn for popular application WhatsApp, the chat application made a net loss of $232.5m. This is despite it increasing revenue to $15m in 2014.

WhatsApp has over 600 million subscribers, but it has yet to charge users for the service.

Operator fight-back

Tencent’s WeChat has 549 million users mainly in China, but the company also makes money from gaming, in-app purchasing, advertising and e-commerce.

The e-commerce advantage has seen profit at Tencent grow to $2.15bn in the first three months of 2015.

Juniper’s research indicated that mobile operators are moving to beat off competition from OTT players.

“Meanwhile, the research observed that with traditional operators’ voice revenues in sharp decline as a result of OTT voice activity, a number of operators have adopted new business models mimicking those of OTT players. These include directly offering functionality such as VoLTE (Voice over LTE) and Wi-Fi calling through the handset,” Juniper said.

Cell C recently announced a commercial Wi-Fi calling service that will launch on October 1. The service allows handsets to automatically use a Wi-Fi hotspot as a cell base station in order to complete a call.

“Whether you are in a basement or find yourself in an area with no cellular coverage, Wi-Fi access will enable you to still receive a full mobile experience, including voice, USSD self service and SMS,” said Cell C chief executive Jose Dos Santos.

Key findings from the Juniper research also indicate that mobile network operators will increasingly adopt VoLTE, driving revenues to $100bn by 2020.

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