In an attempt to raise its revenues from value-added services (VAS), Tata Teleservices Ltd (TTSL) has announced it will provide mobile Internet services on handsets made by China’s Huawei that cost Rs1,999.

Revenue stream: CEO and MD of TTSL Anil Kumar Sardena

VAS currently contributes 9.4% to the company’s revenues and TTSL wants to raise this to 15% within 18 months. The privately held company did not disclose its revenues. With call rates in India among the lowest in the world, telcos are looking at VAS to increase revenues and profit margins.

Research firm Frost & Sullivan says that VAS revenues of mobile phone firms will grow to 20% of total revenues by 2012 from the 10% now. “Revenue from voice services is going down," said Sourabh Kaushal, industry manager, ICT practice, Frost & Sullivan, South Asia and West Asia. “They need to have new value-added services to increase their average revenue per user."

“With this (launch), we are aiming to extract value-added services revenue from mass market," said Pankaj Sethi, president, VAS, TTSL. Apart from the cost of the handset, TTSL plans to charge Rs10 a day or Rs99 a month for its service.

In September, TTSL announced it would offer mobile Internet services on handsets made by Samsung that cost Rs5,500.

VAS earnings are usually dominated by those from text messaging (SMS) and downloads of ringtones, games, and wallpapers. Around 80% of TTSL’s VAS revenues, the company claimed, come from non-SMS services. TTSL’s mobile service is built around Qualcomm’s chip and an Opera browser.

According to TTSL, there are seven million personal computers in India and 38 million Internet users. Mobile Internet on low-cost devices will help users browse the Net. The low-end handsets facilitate only browsing; downloads are not possible. TTSL also said it was looking at mobile advertising as a VAS revenue stream. TTSL, with 20.8 million subscribers in October, is India’s fifth largest mobile phone company. It offers services on a CDMA platform.