Facebook’s acquisition of WhatsApp can only mean bad news for operators, according to industry watchers.

The €11.7 billion deal will see WhatsApp integrated into Facebook’s wider stable of apps and services providing it with a fresh base of 450 million, typically young messaging users, including many in emerging markets.
 
According to Analysys Mason, messaging apps are currently used by more than half of smartphone users worldwide and WhatsApp dominates this market with a 45 percent user market share.
 
The research firm estimates that IP messaging volumes will almost double in 2014 and will reach 37.8 trillion in 2018.
 
Meanwhile, Informa predicts that global annual SMS revenues will drop from €89.3 billion in 2013 to €72 billion by 2018.
 
This perfect storm is bad news for operators, says Adrian Baschnonga, Lead Analyst for Global Telecommunications at EY.
 
“WhatsApp has rewritten the world of instant messaging, consigning SMS to also-ran status in the age of the smartphone,” he said.
 
Victor Basta, managing director of Magister Advisors, agrees: “[The Facebook-WhatsApp deal] is also yet another blow to mobile service providers globally as it is essentially game over for text revenues.”
 
Thorsten Trapp, CTO and co-founder of tyntec, which launched a telco-web OTT convergence platform for operators last year, said the acquisition will enable Facebook to bypass operators internationally.
 
“For mobile operators, this deal means a massive attack on their SMS business as their value chain is based on transaction charges,” he said. “The market is continuing to quickly move away from paid telecommunication services to free internet services and operators need to now seriously think about creating sustainable business models that will allow them to cooperate with OTT players.”
 
[Read more: Just seven percent of operators say joyn is answer to OTT question]
 
Worryingly for operators, Trapp does not think Facebook will stop at OTT messaging.
 
“Facebook’s next move will likely be to acquire a company that has a voice component, enabling them to offer a complete range of communication channels for their users,” he said.
 
Mark Zuckerberg is speaking at Mobile World Congress next week, highlighting the tricky competitor-partner relationship that Facebook and the operator world have endured over the last few years.
 
In December, for example, VimpelCom entered into a partnership with WhatsApp to deliver a series of consumer offers.
 
Martin Garner, SVP of research firm CCS Insight, commented: “Facebook has worked hard to build a constructive relationship with many of the operators… because all of its user growth is on mobile, much of it in areas where mobile is the only real option for using the internet.”
 
Ultimately, Baschnonga thinks how mobile operators live alongside the new technology giants of the mobile internet will dictate the future of the industry.
 
“The worrying prospect of operators being denied growth opportunities by new technology brands remains as real as ever,” he said.

More News

Iliad enters content game in France, finally launches Italian mobile business Iliad enters content game in France, finally launches Italian mobile business Iliad has acquired football rights in France and launched its opco in Italy as it looks to reboot after a disappointing set of financial results. More detail
Three UK appoints new CCO, CFO Three UK appoints new CCO, CFO The departure of Three UK's Chief Commercial Officer after just 18 months in the job has triggered a shake-up of the mobile operator's top team. More detail
TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk has agreed to sell 80,000 business customers to rival Daisy Group in a £175 million deal. More detail
A1 Telekom Austria Group rebrand reaches Bulgaria A1 Telekom Austria Group rebrand reaches Bulgaria Bulgaria is the third A1 Telekom Austria Group opco to get rebranded as the telco looks to market itself as a provider of "advanced" IT, IoT, cloud and content services. More detail
Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services has expanded its work with Dobroflot by developing a customised IoT solution for the Russian fishing company. More detail
    

 

European Communications is now
Mobile Europe and European Communications

  

From June 2018, European Communications magazine 
has merged with its sister title Mobile Europe, into 
Mobile Europe and European Communications.

No more new content is being published on this site - 

for the latest news and features, please go to:
www.mobileeurope.co.uk 

 

@eurocomms