Infosys incubated OnMobile has sailed through turbulent markets. Its IPO was subscribed 10.95 times. The success of OnMobile IPO is a great success for VAS industry. This reaffirms investor faith in the telecom sector and in the Value added Service segment. In an interview with TelecomTIGER, the CEO of OnMobile Mr Arvind Rao shared his views on various issues related to VAS and on OnMobile IPO. Excerpts:

TT: Your share was priced (Rs 450 at upper end of the price band) at 44 times its estimated current year earnings. Isn’t it a very high price?

AR: OnMobile is a growth story. Any growth company is valued on the basis of its fundamentals and future revenues. The current price is only 22 times the projected earnings in the FY 2008-09 and 12-13 times the projected revenues in 2009-10. Therefore, I think that the IPO price was very reasonable.

TT: Why are the revenues from VAS are very low in India?

AR: I do not think VAS revenues in India are very low. For example, in the case of Reliance and Bharti Airtel, VAS revenue is anywhere between 8% and 10% of the total revenue. This may look small in comparision to Japan and Korea where VAS contributes between 255 and 30 of the total revenues of telcos. However, the rest of the world is below 5%. Therefore, India’s performance in VAS is not bad.

TT: What is your market share in India?

AR: In India, OnMobile has a revenue share of between 35% and 45%. The industry is very new and its association is also very new. Therefore, we do not have exact numbers.

TT: What is the total VAS market size in India?

AR: According to industry estimates, the total VAS market size was close to Rs 4,500 crore in 2007. It is growing at between 30% and 40% pr annum. This growth is expected to continue in coming months.

TT: Now that your IPO is a great success, what will you do with the funds?

AR: We will expand our operations- both in India and in overseas markets. We will expand our team in India. We will offer more services. We will also go to Overseas markets to cater needs of their telcos. We will also offer them a number of services.

TT: What is your opinion on Mobile TV?

AR: I am not very bullish on Mobile TV in near terms. First, the size of screen is very small. You need a magnifying glass to see what is happening on the screen. Then most of the handsets are not supportive of it.

Operators will have to make a lot of investments in this segment to make it successful. Therefore, I do not see any huge revenue potential from it in near future.