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Commercial SMS traffic grows by upto 20%, despite recent price hike by telcos

IBEF:  November 10, 2020

Due to higher post-pandemic digital adoption, daily commercial SMS traffic in India has currently increased by ~20%, even as overall text messaging continues to shrink, according to industry estimates.

Currently, ~1.3 billion commercial SMSs are sent every day, according to industry estimates, even after a 30% increase in SMS tariffs taken by telecom operators in September, against ~1.1 billion sent in March.

Due to the shut-down in retail, aviation, travel, tourism and other sectors, the increase comes after a marginal decrease during the lockdown period.

According to data from the telecom regulator, however, the total number of outgoing SMS per subs per month fell from 17.86 in the quarter ending December 2019 to 17.26 per month in the quarter ending March 2020. Since then, the telecom industry says it has been on a decrease as well.

"In Q1 there was a small decrease in SMS traffic compared to Q4, FY20 due to a pandemic as businesses reduced their promotional budgets and e-commerce and retail companies were greatly affected resulting in traffic loss," said Mr. Uday Reddy, Chairman and CEO, Tanla Platforms Ltd, India's largest provider of CPAAS.

He added, “Most of the losses, however, were compensated by other verticals, such as banking (moratorium-related campaigns), government (covid-related campaigns), e-learning, social media, etc.”

The increase comes at a time when the industry has just adopted the largest blockchain use case in the world to check the spam SMS flow, which in September prompted telcos to increase bulk SMS prices by 2.5 paise / SMS.

~70% of India's traffic is transactional and service notifications, while the rest is promotional. According to Tanla, while transactional SMSes have stepped 20%, even promotional activity has picked up in the festive season due to a sharp rise in e-commerce, banking, and payments.

Despite a recent price increase, transactional SMS, which accounts for the largest portion of SMS volumes, is growing rapidly as transactional messages are mission-critical for enterprises. A 30-50% increase in traffic after July was the net effect,” said Mr. Beerud Sheth, CEO and co-founder of Gupshup.

"A2P SMS traffic is still projected to be approximately 1.12 trillion in 2020, a growth of 8.38% year on year," said Mr. Anurag Aggarwal, Director-Messaging Services, Tata Communications.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.