Q3-FY2023-24 Notes
ILD (International Long Distance) Business Overview:
- ILD Revenue Contribution: 25%
- Recent Softness in ILD Business
NLD (National Long Distance) Business Overview:
- NLD Revenue Contribution: 50%
- Expected Organic Growth:
- Mid-single digits in Q3
- Momentum in domestic business
ILD Business Challenges and Outlook:
- ILD Pricing Pressure:
- Approximately 40x-50x compared to domestic pricing
- Shift to OTT Channels Impact:
- Shift in use cases to OTT channels, affecting ILD volumes
- Bottom Reached:
- Confidence in no further decline
- Shifts have stabilized post-October
- Future Growth Expectations:
- Sluggish growth anticipated
- WhatsApp price increase and ILD message support changes may impact positively
ILD Customer Landscape:
- Major Customers:
- Amazon, Snapchat, Microsoft
- Large customers send messages only when necessary
Enterprise Business Growth:
- Steady State Growth:
- Industry growth focused on domestic market
- New use cases contributing to double-digit growth
- Increasing adoption of alternate channels (OTT, WhatsApp, RCS, Truecaller)
Gross Margin Impact:
- ILD Contribution to Gross Margin:
- Absolute revenue higher but margin percentage lower than domestic
- Offshore construct: Higher realizations, higher costs
- Overall Impact:
- No significant dilution in gross margin expected
ILD Revenue and Shift to Other Channels:
- ILD Challenges: Shift to alternative channels due to cost-cutting.
- Promotional Messages: Negligible on ILD; focus on OTPs and informative messages.
- Future Shifts: Meta planning to increase prices; potential return of volumes.
NLD Promotional Messages and RCS Impact:
- RCS Effectiveness: RCS allows rich media, offering better ROI for promotional messages.
- RCS Adoption: Karix and ValueFirst hold over 40% share in the Indian RCS market.
- NLD Promotional Shift: Possibility of promotional messages shifting to RCS for increased impact.
Platform Business and Vi Deal Impact:
- Platform Business Growth: 22% YoY growth, impacted by reduction in international messaging market.
- Vi Contract Exit Impact: Expected to see further impact in Q4; focus on growth in other platforms.
ATP Platform and Commercial Contracts:
- ATP Contracts: Subscription-based model with per-user monthly payments.
- Commercial Contracts: Signed first customer contract, expecting revenues to start in the current quarter.
- Pipeline Growth: Aggressive pursuit of new customers, full impact expected in Q1.
- ATP User Base: Large-scale adoption by one of India’s largest private banks.
- Scalability: Scalable within the bank based on the user base.
ATP Adoption Challenges:
- Regulatory Hurdles: Delays due to regulatory approvals and navigating discussions.
- Regulator Urgency: Frustration with the lack of urgency from regulators.
- Organizational Adoption: Challenges in organizations obtaining regulatory approvals for deployment.
Vi Impact and ATP Platform Comparison:
- Vi Impact Mitigation: Not comparing new ATP deals to Vi loss; confident in overcoming Vi impact.
- Vi Traffic Decline: 30-40% traffic loss in Q3; impact expected to continue until end of March.
- ATP Platform Confidence: ATP deals and other platforms expected to offset Vi impact.
WhatsApp Revenue Target and Current Status:
- ₹100 Crores Quarterly Run Rate: Achieved in Q3.
- Exponential Growth on OTT: Focus on OTT contributing to significant revenue increase.
Unlocking Platform Business Value:
- Platform Business Potential: Run rate of ₹400-500 crores per annum.
- Capex Investment: Considerable investments in platforms.
VF Middle East Indonesia Merger:
- Expected Closure: Regulatory approvals causing delays; confident to close the merger in the current quarter.
Opportunities Beyond India:
- Overseas Potential: Recognizing opportunities to collaborate with telecom companies abroad.
- Regulatory Monitoring: Observing regulatory frameworks in neighboring countries like Saudi, Singapore, and Australia.
- Contributions to Regulations: Actively contributing to shaping regulations in various countries.
- International Deployment: Intent to deploy Wisely ATP platform outside India, contingent on regulatory approval.
Top Tier Talent Acquisition:
- Strategic Talent Addition: Emphasis on recruiting top-tier talent.
- R&D Focus: Allocation of funds (₹40-45 crores) for R&D, resulting in ongoing product development.
- Quarterly Average: Average spending of ₹12-14 crores per quarter on R&D.
- Upcoming Products: New products and solutions in the pipeline.
Digital Platform Growth Expectations:
- Current Growth: Achieving around 20% growth in the digital platform segment.
- Investment in Platforms: Significant investments made in building and expanding platforms.
- Greenfield Approach: Focused on greenfield opportunities, not aiming to replicate existing platforms.
- Market Potential: Recognizing substantial opportunities in the digital platform space.
- Future Growth Projection: Expecting to sustain a minimum of 20% growth in the next three to four years.
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