Feature Phones in India & Emerging Markets A Risk : Twitter (IPO Filing)

Users accessing Twitter from India and emerging market from feature phone might pose a business risk, said the company which has filed for an IPO. Twitter in India is estimated to have 20 million users.

Twitter which filed for an IPO the last month, has said that feature phones used in emerging markets such as India to access Twitter limits its ability to deliver compelling advertisements in these markets and may result in reduced ad engagement which would “adversely affect” the company’s business and operating results.Twitter Wisdom Angel

The company which filed form S1 with the US Securities and Exchange Commission, listed failure to expand effectively in international markets as a potential risk that could harm its business.

Twitter said

Our user base may expand more rapidly in international regions where we are less successful in monetizing our products and services. As our user base continues to expand internationally, we will need to increase revenue from the activity generated by our international users in order to grow our business.

In the three months ended June 30, 2013, 77% of Twitter’s monthly active users were from outside of United states. “But our international revenue, as determined based on the billing location of our advertisers, was only 25% of our consolidated revenue in the three months ended June 30, 2013. Our inability to successfully expand internationally could adversely affect our business, financial condition and operating results,” the company said.

Companies filing for an IPO are required to outline the risks associated with its business at the time of filing.

Twitter says it has a total of 215 Million Monthly Active Users. The micro blogging site is also seeing a clear shift to mobile. For the quarter ending June, 75% of the company’s monthly active users came from a mobile device. The company, which has filed for a $1 bn IPO, posted a tiny loss on a revenue of $253 mn for the 6 months ended June 30, 2013.

As this PTI story points out, the company’s international revenues were $53 mn in 2012 or 17% of its total revenues.

In India, Twitter has been working with political parties and Television channels to expand its reach as well as potential to monetize the user base. The company has an estimated 20 million users in India. As we’d written earlier: As the elections approach, top officials from Twitter India have been hobnobbing with the political parties (such as the ruling Indian National Congress). The site has also been a place for many political debates. Twitter feeds are regularly aired on Television channels that have a lot of influence in India.

The company said that its platform partners will play a key role in its growth. Besides 6 million websites, media outlets such as BBC, CNN & Times of India regularly use Twitter as a platform for content distribution.

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