Can Truecaller weather India’s CNAP plan?

With 70% of its business coming from India, the Swedish caller ID services company faces uncertainty as the country moves ahead with Calling Name Presentation.

On 23 February, the Telecom Regulatory Authority of India (TRAI) released a set of recommendations for introducing caller identification as a default feature in Indian telecom networks. The recommendations offered a look at not just how the feature would work but also put up for debate conversations around what would happen to one particular company—Sweden-headquartered caller and spam identification service, Truecaller.

The reason for this is very simple—last year, Truecaller earned USD 167.9 million in annual revenue, of which India contributed USD 126.4 million—just over 75%. In terms of the firm’s user base, at the end of December last year, Truecaller had 374.1 million users, of which 266.2 million or over 71% came from India. This makes the business over-reliant on India; without its business here, Truecaller’s annual revenue will only be a fraction of what it is right now.

What Truecaller brings to the table

Truecaller’s active user base ropes in approximately one in every three smartphone users in India on average, making the app one of the most popular mobile applications across Indian phones. This, however, comes with a caveat.

Truecaller has attempted to expand to offer a wide range of features, including establishing a social media-like ability for users to comment on certain numbers or even look others up. While this would have otherwise been good, the company continues to be identified as a caller identification service provider only.

Last year, 75% of Truecaller’s USD 167.9 million revenue came from India, with over 71% of its 374.1 million global user base originating from the country.

The publicly listed firm operates this service through its database of contacts, which allows numbers to be marked as spam through voluntary user reporting and Truecaller’s flagging mechanism. While there have been many voices underlining that this database of contacts has largely been acquired by accessing users’ phone number databases, the fact is that Truecaller has a massive database of mobile numbers, which makes it a vital cog in today’s data-driven world.

The key challenges that lie ahead

The company faces a growing array of privacy regulations in India and worldwide. Specifically, the Digital Personal Data Privacy (DPDP) Act of 2023, which is awaiting notification pending clearance and adoption of its rules, could present a substantial compliance challenge.

Add to this the Ministry of Communications’ efforts to introduce CNAP or Calling Name Presentation, a facility that is currently in development and could be introduced in the years to come. The TRAI has recommended the rollout of the default caller identification feature across all telecom operators in the country, providing users with a native method to identify incoming calls. However, users may need to opt-in to utilise this feature, which as per the present recommendation, is not expected to be mandatory for all calls nationwide. Nevertheless, if users do choose to enable it, every call should display a corresponding name.

The introduction of such a feature is likely to reduce the necessity for users to rely on Truecaller. Consequently, industry experts anticipate a certain level of impact on the company’s market position, as Truecaller’s core offering will lose its USP and distinctive features.

Moreover, Truecaller’s Gold and Premium subscription services are likely to face an even greater impact. These services already face challenges in gaining traction among users, with non-paying customers happily waiting for the advertisements to be over. However, with the introduction of a default CNAP feature, industry analysts predict that Truecaller may find it difficult to attract users to its premium offerings, potentially resulting in slower revenue growth or even revenue decline.

Not all is lost, though

CNAP, for now, is still far away in the future. What’s more, it faces numerous challenges, including the need to seek feedback from telecom operators and technical considerations, before it can be implemented.

Telcos, for instance, have expressed their concerns that the implementation of CNAP will lead to

substantial infrastructure costs and also add considerably to call latencies, or the amount of time a user has to wait for the network to fetch a caller’s details before it is connected. The delays in fetching call details before a connection could lead to a frustrating user experience and require careful consideration in its implementation.

Furthermore, experts have raised doubts about the reliability of CNAP results. TRAI’s recommendation suggests fetching the name of the person to whom the phone number was originally issued. Such names could be misleading in terms of a wilful scammer, who often uses stolen KYC data to gain access to SIM cards. Also, incorporating such details would be challenging for a government entity, as they lack access to privately maintained databases for cross-referencing.

Moreover, on 4 March, Union IT Minister Ashwini Vaishnaw launched Chakshu— a platform for reporting fraud and spam calls, which the government claims has already helped recover over 7,00,000 stolen mobile phones. Vaishnaw mentioned during a post-announcement press conference that the government may collaborate with Truecaller to strengthen such features using its spam database, potentially opening new avenues for partnership.

If and when such avenues are opened, partnering with the government could be a strategic move for the company to remain relevant in the market and potentially increase earnings.

However, it is still too early to fully understand what lies in the future for solutions such as CNAP and platforms like Chakshu. Until then, Truecaller would be sure to look over their shoulders and prepare for a revenue emergency that could arise here—needing them to alter their operating strategy in the long run.

feedbackvnd@cybermedia.co.in