Nimbuzz Offers Free Service To Hutch In Sri Lanka, Continues To Push Telco Strategy in Asia

Nimbuzz is continuing its push for South Asian dominance with its latest telco partnership. The Indian messaging startup just announced a tie-up with Hutch in Sri Lanka, offering six months of free Nimbuzz usage to Hutch subscribers.

Today’s announcement is just another in a steady string of telco partnerships that the company has been striking up. In May, it linked up with Mobilink in Pakistan, to give the telco’s 35 million subscribers access to Nimbuzz at a flat cost.

The deal was similar to one that Nimbuzz made with India’s Aircel in February. The company has a total of eight telco tie-ups in India, covering nearly 75 per cent of the country, except for Vodafone’s users, said Vikas Saxena, Nimbuzz’s CEO.

The point of all these deals is to ease friction in getting Nimbuzz on phones in the country.

Saxena explained that billing continues to be an issue in Asia, where credit cards are not as common as they are in the West. Here, telco billing is one of the easier ways to reach users, offering the option of prepaid credit or through monthly phone bills. “Ringtones and ringback tones sell (over phones) like hotcakes here, even though you can download these over the Internet,” he said.

Telco billing is a strategy that even music providers in Asia have turned to. KKBOX and Deezer, for example, have used carrier tie-ups in the region to reach users more effectively.

A second reason for the telco tie-ups is that bundled offerings are especially necessary in price-sensitive markets like India and the neighboring countries.

In the Aircel deal, for example, signing up for Nimbuzz granted users 40Mb of data per month to use. It doesn’t sound like much, but it helps in a country where people hold multiple SIM cards to use different offers from rival telcos, such as more voice minutes from one and free texts from another.

The smartphone messaging landgrab
Nimbuzz has a total of 150 million users, and counts more than 210,000 new registrations per day. 25 million of its users are in India.
Its plans to stake a claim to South Asia is not unchallenged. Other Asian messengers are eyeing new markets too, and have large existing user bases to pull new users toward them.

Tencent’s WeChat app has a base of 300 million subscribers, and Japan’s Line just passed 150 million. US-based WhatsApp has 200 million active monthly users. Korean Kakao Talk has a smaller but growing base of 90 million, according to recent reports.

Vikas Saxena, Nimbuzz CEO

Vikas Saxena, Nimbuzz CEO

The fight for Asia’s new markets is evident. WeChat has started to air TV commercials in countries in Asia. And in the emerging markets—clashing head-to-head with Nimbuzz, especially—WeChat just made its apps compatible with the low-end Nokia Series 40 Asha smartphones. WhatsApp is also compatible with the Asha line.

India, as a relatively less penetrated market, appears to hold great potential for getting a large volume of users onboard. But several barriers persist in the immediate timeframe.

For one, the smartphone base is growing but still minuscule because of the relative price of smartphones to average income. Data plans are generally priced a little outside of mainstream access, too, resulting in a small mobile data subscriber base. According to the country’s regulator, only 2 percent of Indian cellphone users had 3G subscriptions in 2012.

Besides price, part of this can be blamed on the country coming late to 3G. The spectrum licenses were only auctioned in 2010.

For now, Saxena is eagerly waiting for smartphones to become mainstream in India. “When smartphones get below $100 in the next two to three years, the 60-70 million mobile Internet users will become 200-300 million,” he said.

Nimbuzz gets a cut of data revenues or has flat fee deals with the telcos, but this isn’t the main plan for revenue—mobile advertising is.

In March, it launched a commercial tie-up with Mentos-maker, Perfetti Van Melle (India). Nimbuzz has a Chat Buddy module allows Mentos to directly chat with Nimbuzz’s users.

It seems opt in: Nimbuzz users can install the Mentos Chat Buddy and solve a murder mystery, with a prize awarded by a lucky draw.

Line has a similar strategy. According to an e27 interview with Bubble Motion’s CEO, Thomas Clayton, the Japanese company charges brands about $200,000 for official accounts on the app, which allow brands and celebrities to broadcast messages to users.

Nimbuzz is backed by Mangrove Capital Partners. Saxena would not say if the startup was profitable yet.

It employs less than 100 people, most of whom are located in India. It also has a regional office in Dubai.