Facebook: India Update

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Facebook has 100 million users in India, while WhatsApp has 48 million users in the country.

The Telecom Regulatory Authority of India plans to regulate the Over the top apps, and impose connectivity charges along with revenue sharing with the government.

This move can affect Facebook's user base in the country, as well as the monetization of WhatsApp and its unbundled messenger app.

The popular Over the top (or OTT) apps in India include WhatsApp, WeChat, Viber, Skype, and LINE. The Indian telecom industry loses $819.67 million (INR 50 billion) annually due to these OTT apps. These losses are expected to cross $2.68 billion (INR 164 billion) in the next two years due to increase in the usage of smartphone with internet service. The Telecom Regulatory Authority of India (or TRAI) plans to regulate the OTT players. This involves the OTT players paying connectivity charges to telecom companies, and sharing revenue with the government. As a part of security measure, the TRAI may order the OTT players to deploy their servers in India.

Currently, Tata Docomo, and Reliance Communications provide unlimited WhatsApp data plans in India. Facebook (NASDAQ:FB) has 100 million users in India, while WhatsApp has over 48 million active users in the country. However, India contributes less than 0.1% to Facebook's global revenue.

Remittances remain a major part of the global money transfers. In 2013, India topped the list with $70 billion in remittances. In June this year, Paypal CEO David Marcus joined Facebook to handle the company's messaging products. Facebook could monetize its unbundled messenger app and WhatsApp through payments. If the TRAI levies connectivity charges and revenue sharing, then Facebook will have to charge its users for using WhatsApp and its messenger app. This could affect its user base, which can affect its revenue growth from India.


The Indian telecom industry will not give a free ride to OTT players. The TRAI policy could affect the monetization of Facebook messenger and WhatsApp. Facebook will have to devise a strategy that will enable it to enhance its revenue from India without affecting the telecom sector revenue.

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