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Telefonica Acquires Jajah: If you can’t beat them, buy them

by User Not Found | Jan 05, 2010

Telefonica’s acquisition of VoIP service provider Jajah over the Christmas period was an interesting move for a very much traditional telco. Jajah is one of the real success stories in pushing VoIP to the masses. It has pushed far beyond its call-back roots to offer mobile clients for 3G and WiFi-based VoIP calling and, more significantly, adding wholesale solutions (with Yahoo! Voice it’s most significant partner). Jajah launched in March 2006 and had 10 million customers by March 2008 and, helped by the wholesale expansion, 25 million customers by mid 2009. In a consumer (and mobile) VoIP space generally served by many small providers, Jajah is a major force. It is a minnow alongside Skype but then most players in this space are. Skype’s Q3 2009 results showed:    521M registered users,    over 20M users online at peak times,    27.7B minutes of Skype-to-Skype calls (of which over one third were video calls),    3.1B minutes to landlines & cellphones. So will Telefonica and O2 join Hutchison 3G as a mobile operator aggressively pushing VoIP on mobile phones? Well, initially it seems very little will change, with Jajah operating independently and reporting into Telefonica Europe. As an incumbent telco seeing its fixed telephony minutes under threat from VoIP, having a business to compensate for that by stealing minutes in other markets has some benefit. However, the real benefit will come from closer integration and the announcement alludes to this with the European operations to “be the first of Telefonica’s regional business divisions to offer seamless Jajah services to customers wishing to extend their communications experience.” Certainly, Europe’s mobile operators need to embrace affordable international call services. Hutchison 3G has made the leap with iSkoot’s Skype solution, but alongside some of Jajah’s VoIP competitors (fring, RebTel, Truphone, Vyke, etc.) there is an increasingly successful MVNO market offering low-cost international prepaid services. Players in this space (such as Lycamobile, Lebara and KPN’s Ortel) have gone from less than 3 million users at the end of 2007 to more than 10 million at the end of 2009. Collectively, these international call providers are scaling to a point where mobile operators need to respond. They have never relied on international calling as a meaningful revenue flow, but the international offers pull domestic use with them. With over 6% of the EU’s population being classified as foreigners based on citizenship and probably at least twice this number of people having an immigration background, mobile operators need to see international calling as a useful tool to serve an important market segment. Jajah offers Telefonica and O2 an excellent platform to achieve that. - Phil Kendall
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