How Facebook Could Become the World’s Largest Telecom Provider

When Facebook bought WhatsAPP for $19 billion it shocked even the most seasoned veterans here in Silicon Valley. Most of us analysts questioned how they came up with this valuation. We then started trying to dissect this deal and figure out why Facebook decided to pay so much for this messaging company. There have been thousands of articles written about this acquisition as analysts and media have tried to make sense of this move by Facebook. The fact that WhatsApp had 450 million users was easy to see as the main reason since it could help Facebook get to their next goal of adding another billion users to their social media platform. It was also clear that WhatsApp could add another platform layer to Facebook’s infrastructure that could eventually become an ad vehicle as well.

Although this is the largest price anyone has paid for a company of this nature, one thing I have learned about acquisitions here in Silicon Valley is that a lot of valuations are based on future opportunities and not necessarily tied to current or even projected earnings by itself. Most of the great ones are highly strategic and bring unseen value to the company in ways that most cannot even grasp at the time of the investment. I suspect there is even more behind this acquisition.

One of the more interesting features of WhatsApp is its VOIP calling feature. I use it all the time when I am on Wifi to bypass my telecom carrier to cut down on minutes used via my current voice plan. And here is the best part. It cost me $1.00 a year to call anywhere in the world and talk as long as I want. An even more interesting data point is that WhatsApp already has 450 million “VOIP” customers compared to Microsoft’s 200+ million on their Skype platform. While I also use Skype, especially when I am abroad, the way the VOIP feature is seamlessly integrated into the WhatsApp message application. Which has become an important messaging medium for me when connecting with family and my staff, makes it even easier than having to fire up my Skype App to make my VOIP calls.

Although many WhatsApp users are also Facebook users, the fact remains that WhatsApp still gives Facebook millions of new users to connect to and at the same time got a powerful communications platform that allows them to innovate with and make it part of Facebook’s services. But what many have not realized is that WhatsApp has now given Facebook the opportunity to become a major VOIP provider and could even pave the way to for them to become the world’s largest telecom provider someday.

This idea has been on my mind since I heard of this news last week. Since I am a heavy user of their VOIP calling service it got me wondering if this was not at the heart of this acquisition. Facebook itself is a great communications platform in its own right. But for many, especially in emerging markets, voice calling is still at the center of the way they actually communicate. What if Facebook could also become an MVNO at the local country level and become the major telecom supplier especially in emerging markets and end up providing a of one-stop fully integrated communications medium and telecom platform.

Mark Zuckerberg is highly focused on bringing billions of people online and what better way to do this than by creating a social, messaging and VOIP platform for these markets and then providing the pipes and very low cost links to make this happen. Mark will push to try and get the local telecoms to be more aggressive in their data pricing and reach. If he can’t, he could be the one to do it via an MVNO (in emerging markets) play and use ads and services from these local markets tied to their social and messaging apps to subsidize the telecom piece if needed.

This scenario is not too far fetched. Adding an MVNO layer could help Facebook achieve even greater WW reach and eventually become the world’s largest telecom provider in the process.