 "Kavin Mittal's Hike Messenger buys Zip Phone")
The acquisition, the first by the company run by Bharti Enterprises Group Chief Executive Sunil Mittal’s son, is aimed at expanding instant-messaging platform Hike’s product range in internet-based communication through launch of voice-calling services.
The move is significant also because it comes within weeks of Sunil Mittal-controlled Bharti Airtel, India’s largest telecom service provider, announcing its plan to charge different data rates for voice over internet protocol (VoIP) services used by applications like Skype. This was seen as violating the concept of net-neutrality and the company stalled the plan amid reports the Telecom Regulatory Authority of India (Trai) might issue a consultation paper on over-the-top (OTT) companies.
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OTT companies are those that deliver audio, video and other media over the internet without involving a multiple-system operator in control or distribution of content.
Through the Zip Phone acquisition, Kavin Mittal is expanding his portfolio in the OTT space, even as the company led by his father, despite having its own VoIP service in AirtelTalk and other OTT services like music app Wynk, is batting for differential pricing for such applications. Launched in December 2012, Hike Messenger claims to have more than 35 million users and has to date raised $86 million from Tiger Global and Bharti SoftBank, a joint venture between Bharti Enterprises and Japan’s SoftBank Corp. Zip Phone, founded in the US by Anuj Jain, offers a voice-calling app that works globally. The company was part of the 2014 summer batch list of the prestigious Y Combinator, a US-based seed accelerator that also picks up equity stakes in start-ups.
Hike Messenger founder & chief executive officer Kavin Mittal said: “From day one, we have strongly believed we can bring India online through communication. With this acquisition, we take another step towards that mission. Zip Phone’s technology will allow us to bring free voice calling to the market much faster. Incidentally, this is one of the features most requested by our users. We cannot wait to launch this on Hike.”
In the instant-messaging space, Hike competes with WhatsApp (owned by Facebook), WeChat (owned by China’s Tencent) and Japan’s Line. With about 70 million active users, WhatsApp is the market leader in India.
In voice calling through applications, Skype is the market leader, Other applications like Viber and Line are also present in India in this segment. Last year, UK-based New Call Telecom bought a 70 per cent stake in instant messaging and voice-over-internet call and advertising service provider, Nimbuzz, for about $175 million. Nimbuzz claims to have more than 40 million users in India.
Globally, there are many other instant-messaging applications, such as South Korea’s KakaoTalk, Taiwan’s Cubie, Vietnam’s Zalo and Singapore’s LoveByte, that also offer voice calling.
According to a recent study by GlobalWebIndex, 52 per cent of Indian instant-messaging users avail of WhatsApp’s service, while 42 per cent use Facebook Messenger. Skype is used by 37 per cent, WeChat by 26 per cent, Viber by 18 per cent, Line (12 per cent), Snapchat (nine per cent), Kik Messenger (five per cent), Tango (four per cent) and Kakao Talk (three per cent). Hike does not appear on the GlobalWebIndex list.
Many say voice calling services on internet, if successful, might potentially eat into telecom operators’ revenues from voice, which currently accounts for 80 per cent of their overall earnings in India, in a big way.
Instant messaging has already killed text messaging as a revenue earner for telcos. With the trend of instant-messaging applications picking up, text messages’ share in telecom operators’ revenue dropped to about five per cent as at the end of March 2014 from around 10 per cent a few quarters earlier.