Carrier billingin INDIA2016 market reportby Fortumo

This market report gives an overview of the carrier billing ecosystem in India. India is home to the world’s second largest smartphone user base after China, having overtaken the US in the beginning of 2016.

India is a mobile-first market with the primary device for online access being a mobile device. Today, a majority of these devices are still primarily feature phones but thanks to low-cost Android phones, smartphone ownership is growing rapidly. GSMA Intelligence estimates that emerging markets like India will reach 70% smartphone penetration by 2020. In fact, while internet growth in the rest of the world is slowing down, in India it is accelerating.

Carrier billing in India: 2016 market report by Fortumo

The large growth in smartphones presents a significant opportunity for digital content merchants. As a low income economy, smartphones are one of the key channels of entertainment for a majority of the population. This is also evident in the fact that people cut back on spending in other consumer goods segments at the expense of entertainment on smartphones. Despite lower income, Indians spend as much money on mobile games as the global average.

With 1.3 billion people, most digital content merchants now have expansion in India part of their core strategy. But India is a very different market from the US or Germany. Lower user income, lack of access to online payment methods and mobile data and cultural differences are the key differentiators which require merchants to create an alternative strategy to growing in India.

This market report profiles what merchants can do in order to be successful in India and also gives an overview of the carrier billing in the country. This payment method is available to 40x more people than credit cards.

Sanjay SinhaVice President of Business Development, AsiaFortumo

Mattias LiivakHead of Marketing & PRFortumo

Should you have any questions about the report, please get in touch with us at bd@fortumo.com.

Carrier billing in India: 2016 market report by Fortumo

IndiaMarket profile

Gross National Income (GNI)per capita (The World Bank):

Median age:

27 years

20%

1300 million

Smartphone penetration

(from population):

Population:

$1590

Mobile penetration

(from population):

77%

Currency: 1 Indian Rupee (INR) = $0.015(exchange rate as of September 7th, 2016)

15%

Mobile broadbandaccess (of all

mobile phones):

95%

Prepaid SIMmarket share:

Credit cardpenetration:

2%

Carrier billing in India: 2016 market report by Fortumo

Carrier billing in India: 2016 market report by Fortumo

Carrier billing landscape

Web and mobile web

Android apps

Feature phonesMonthly ARPPU: $0.4 (YoY change: -8%)

Average transaction size: $0.2 (0%)

Monthly ARPPU: $2.6 (YoY change: +160%)

Average transaction size: $1.8 (+200%)

Monthly ARPPU: $2.6 (YoY change: +80%)

Average transaction size: $2.2 (+225%)

Carrier billing in India: 2016 market report by Fortumo

Carrier billing landscape

Market share of carrier billing in digital gaming (SuperdataResearch): 18% (3rd most popular payment method)

Bharti Airtel

Vodafone

Idea Cellular

Reliance Communications

Aircel

Tata DoCoMo

24%

19%

17%

10%

8%

6%

248M

190M

182M

90M

64M

47M

Carriers supported by Fortumo:

Telecommunications regulator: Telecom Regulatory Authority of India

CarrierMarket share

Active connections

CARRIERMARKETSHARES

Carrier billing in India: 2016 market report by Fortumo

Carrier billing landscape

Payment types: one-off transactions and subscriptions (weekly and monthly billing)

Localization:As only 10% of people speak English, localization is recommended.

Hindi (422 million speakers) is the primary language to localize for with 21 additional official languages recognized by the government.

From an operational point of view, having a local office in India has some advantages in terms of taxation and reconciliation. Merchants should keep in mind that online purchases through carrier billing incur a 15-16% WPC (spectrum fee) as well as Service tax (15%). And any payout to merchant is subject to TDS (10%) or WHT (10%-20% depending on the region). As Fortumo has an office in the country, merchants working with Fortumo can avoid many of the complexities.

English

Hindi

Others

1 Segment growth is based on aggregated data of two benchmark merchants in the country with the highest payment processing volume. Transaction volume data is meant to illustrate comparative differ-ence in size between segments.

Carrier billing in India: 2016 market report by Fortumo

Carrier billing growth by segment1

Streaming Gaming Social

2015 2016 Volume change %

+40%

+3%

+135%

$0.5

$2.2$1.5

$0.9$1.9 $1.8

+80%

-14% +20%

Processing volume

Average transaction volume2015 2016 Volume change %

Streaming Gaming Social

Carrier billing in India: 2016 market report by Fortumo

Mobile data accessGSMA Intelligence that approximately 195 million people (15% of the population) in India have access to mobile data. At the same time, an estimated 260 million people in the country already own a smartphone. Many people averse to enabling mobile data on their smartphones and prefer to use WiFi access wherever possible.

Some service providers such as Google have sought to challenge this problem by making public WiFi available for free. The recently launched new mobile operator (Reliance Jio) is also offering mobile data at rates substantially below the market average, which is likely to bring down the overall pricing of internet access and increase mobile data usage.

Mobile data speeds are relatively low in India and digital content merchants should account for this. 40% of mobile data users are browsing at speeds below 3G. Higher speed networks are generally located in urban areas with data connectivity lacking in rural areas. It’s important to note significant differences in access to mobile data speed and quality by state (“Circle”) and a good overview of this can be viewed from the telecom regulator TRAI’s MySpeed portal.

Mobile broadbandaccess

Smartphonepenetration

Carrier billing in India: 2016 market report by Fortumo

Mobile data accessDespite current lack of access to mobile data, most forecasts indicate significant growth over the upcoming years. An estimated 300 million people will be able to access 3G/4G networks by 2018 and rural internet usage is estimated to grow 30% per year.

Overall, mobile data traffic in India is expected to grow 15 times by 2021.

Digital content merchants entering the Indian market thus need to account for the lack of access to mobile data and need to think about whether the service is functional on sub-3G connections and whether it could be made available for offline usage.

200

250

300

2016 2017 2018

Mobile broadband growth

Carrier billing in India: 2016 market report by Fortumo

A localized payments strategy is the key to success in India

The income gap between US and India is 25-fold. Furthermore, only 2% of people have access to credit cards in the country. Due to this, the same monetization strategy that is working for Western markets will most likely not succeed in India. The two main points for merchants to consider from a monetization perspective when planning their strategy for India are:

Lack of access to bank-based payment methods: With low ownership of bank cards, alternative payment solutions (digital wallets, carrier billing) need to be integrated in order to make payments available for a majority of the audience.

Localized pricing:Due to the gap in income, pricing of services should be modified for it to be in line with user income as well as content that is sold by local service providers. For subscription services, packages of shorter duration (daily, weekly access) should be considered as most users do not have enough money (or the willingness) to pay for long periods of access at once.

1.

2.

Carrier billing in India: 2016 market report by Fortumo

Key players in the digital ecosystem:

Streaming: Gaana, Wynk Music, Ditto TV, TenSports, HOOQ, Apple MusicPayment companies: PayTM, PayU, Citrus Pay, MobikwikGaming: Octro, Moonfrog, 99GamesOEMs & OSs: Micromax, Lava, Intex, Reliance, Indus OSDigital commerce: Flipkart, Hike, Snapdeal, AmazonE-learning: HashLearn, Byju, UnacademyIndependent app stores: 9game, App Bazaar, Mobango Industry organizations: NASSCOM, IAMAI

Media channels for news on the digital ecosystem:Medianama, BusinessLine, Dazeinfo, YourStory, ET Tech, iamwire, TrakIN, NDTV, SiliconIndia

Additional reading

Why does localization matter more than ever before?Read now

Carrier billing in Western Europe: 2016 market report by FortumoRead now

White paper: risk and fraud management with carrier billingRead now

https://fortumo.comhttps://facebook.com/fortumohttps://twitter.com/fortumohttps://www.linkedin.com/company/fortumo-ltd.

Fortumo is a mobile payments company that enables direct carrier billing with more than 350 mobile operators in 90+ countries. Fortumo's payment products work across a wide range of platforms including desktop devices, smartphones, feature phones, tablets and smart TV-s. These products give consumers a simple, 1-click payment method to charge online purchases to their phone bill. For app stores, digital media companies and game developers, Fortumo provides one integration with 350 mobile operators as well as a single point of contact for settlements, reporting, support and infrastructure upgrades. Founded in 2007, Fortumo has offices in Estonia, San Francisco, Beijing, Delhi, Singapore & Hanoi and is backed by Intel Capital and Greycroft Partners.

This document is for informational purposes only. Fortumo and the authors make no expressed or implied warranties in this document. Fortumo and the author(s) make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in this document. Any opinions expressed in this document are subject to change without notice. This document may be based on a number of assumptions and different assumptions could result in materially different results. This document should not be regarded by recipients as a substitute for obtaining independent advice and/or the exercise of their own judgement, and is not to be relied upon by recipients. Fortumo and the authors, and any of their members, directors, employees or agents do not accept any liability for any loss or damage arising out of the use of all or any part of this document. Copyright © 2016 Fortumo | All rights reserved.