The WhatsApp Effect

On the national data site ( the Telecom Regulatory Authority of India (TRAI) has put out some data on GSM telephony in the last five years. This has aggregate all-India data, and one of the data points available is “Outgoing SMS per subscriber per month”. The following graph plots this data over time:



Notice how the number of SMSs per user which rose sharply till mid 2011 then started suddenly dropping off! There seems to be a minor revival between March and June 2012, but apart from that it seems to be a secular decline. I can’t think of any reason apart from the profusion of smartphones and messaging apps on such phones such as WhatsApp, WeChat, etc. for this decline.

The total number of GSM subscribers also shows an interesting pattern,  going by the TRAI data. There is massive increase in the number of subscribers till 2012, and then the graph flatlines!



The only reason  I can think of for this is that there might have been some sort of a subscriber clean up in 2012. If you remember, when telcos introduced “unlimited subscription” plans for prepaid mobiles back in 2006, these so-called “unlimited plans” expired sometime in 2012. This was on account of re-auction of telecom spectrum that year. It is possible that users who were “active” only because of possession of unlimited plans were weeded out after 2012, and hence the flatline. Otherwise, the above trajectory is hard to believe.

Finally, what about the telecom tariffs? The supplied data set has information on the Average Revenue Per User (ARPU) per month, and the number of outgoing minutes of usage per subscriber. Assuming SMSs don’t cost anything (wrong assumption – since they do), we can calculate the telecom tariffs (in Rs. per minute). The following graph shows that:



Back in 2009, tariffs were close to a rupee a minute. However, between 2009 and 2010, tariffs dropped sharply, to the range of about 60 paisa per minute, which comes down to a paisa a second! Interestingly, tariffs have remained constant ever since.

2 thoughts on “The WhatsApp Effect”

  1. Karthik,

    Some very strong assumptions in this post..
    1. The reason why the telecom growth in India has flattened is not because of the type of billing plans or because of expiry of lifelong plans. The industry witnessed the astronomical growth because of the fact that mobile phones were cheap. Billing plans only helped people retain a Sim longer than usual. Data shows that average telecom user actually owns 1.95 Sim cards. As a country we have hit a 70%+ teledensity and there is no reason why subsctibet growth should continue to be at 30%. I think this is the natural growth cycle.

    2. You assumed that arpu consists of only voice and sms. Arpu in telecom has two components – voice and non voice. Non voice consists of vas+ sms+ data. Your assumption ignores both data and bas which have had a significant contribution in arpu. Over the past 8 years vas revenue contributed as much as 15% to the telecom operators bottom line. The price wars which started post entry of tata DoCoMo did result in the slashing of tariff plans but if you look at the voice plans atleast , the tariffs are back to normal. All the leading operators are back to standard per minute pulse with higher tariffs.

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