Mahindra Comviva CTO Arun Tanksali talks about VAS trends, VAS vs apps and more

Tech Mahindra acquired 51 per cent stake in Bharti Group's mobile VAS firm Comviva last year for Rs 260 crore ($48 million) and the firm was rechristened as Mahindra Comviva. The VAS firm's suite of services includes solutions spanning mobile money and payments, mobile data, integrated messaging, mobile lifestyle and customer life cycle management solutions. Arun Tanksali, CTO, Mahindra Comviva spoke to Techcircle.in on how the firm is shaping up post acquisition, its new strategy and trends expected in the market. Edited excerpts:

How has the overall strategy changed post acquisition by Tech Mahindra?

The strategy overall hasn't changed much. We are a different company and we continue to function as such. However, we will look to expand to more geographies leveraging Tech Mahindra's reach. Traditional geographies where we have been strong are India, Southeast Asia, SAARC countries, Africa and other emerging markets. Areas we don't cover as of today are US, western European market, Japan and Korea; maybe we will see additional opportunities to cater to these geographies further on.

How big is your customer base using Mahindra Comviva products and services?

All our products are B2B; so essentially our customers are telecom operators. We have customers in 93 countries. Generally, each geography has only two-three major telecom players and we have all of them on board. In total, around 140 mobile operators are our customers.

How has the growth been in last two fiscals—FY12 and FY13?

We are operating in the fastest growing markets in the mobile ecosystem. India, Africa and Latin America have been growing very rapidly. Though we can't share specific numbers as of now, we have had a good year. We did better than what we targeted.

Our data shows Mahindra Comviva grew fast in revenues, from Rs 130 crore to Rs 320 crore between FY07 and FY11. However, profits and margins grew much slower. How do you explain this?

Growth always comes with investments to be done. As a product company we have to invest in products and technology much before customers come into that segment. That was a period when we were developing forward-looking products and technology whose benefit we are reaping now.

What will the focus areas in terms of products and services for Mahindra Comviva going forward?

Let me take you through the different verticals we operate in currently. First is mobile prepaid recharge and mobile payments. We are one of the largest players in this area. We launched this product five years ago and today, one in every eight persons uses our mobile top-up solutions. In the payments space also we hold 38 per cent market share. Second area is data. We have traditionally been very strong in the data space. We provide mobile Internet gateways, Internet access optimisation, etc to operators. Over the last few years we have expanded the portfolio to include Wi-Fi and WiMax; so operators who offer multi-network services use our optimisation solution. We have over 45 customers for these products. Entertainment is the third area. We have our own content development team. We are one of the largest providers of ring back tone services also.

We have also introduced some newer solutions. One of the newer solutions revolves around data management which lets users know details of their data and balance consumption. Another solution is around Big Data that analyses usage patterns of customers and lets operators give customised plans to subscribers. Going forward, we will keep on innovating with newer solutions as well as continue with our traditional services as well.

VAS market is said to be giving way to a bigger app economy. Where do you stand on that front and what do you feel about VAS vs app distinction from a business standpoint?

We launched products in apps last year. We are active in that space as well. But VAS vs app tussle right now is not as much in the emerging markets as in the developed markets. A few reasons are: apps tend to be based on availability of smartphones and that class of phones is still a small per cent, say 10 per cent, in the emerging markets. Apps can only reach that percentage of people. But for the remaining customers, services are offered via WAP. The content is not much different. Also, paid apps depend on credit card-based payments. In markets today card payments are also not that popular. Thus, the ecosystem in emerging markets is pretty different from that in developed ones.

What are some of the new trends in VAS that you are seeing?

New areas which are gaining focus are education and healthcare-related services delivered via phone as these are not traditional VAS services. The trends are surely changing. Earlier, entertainment (music, caller tunes, etc) were the most popular VAS but these new trends are also coming to the mainstream now.

There are a lot of new startups doing interesting tuff in the mobile payments space. Since you have been in the market for some time, would you now look at acquisitions in this space?

We are one of the largest players in this space. For the next five years, we will see explosive growth in this sector and if we see a great opportunity to acquire or partner with good companies we might look at it. But as of now nothing is in the pipeline.