Facebook Inc (FB) Whatsapp Deal May Threaten Telecom Companies

Facebook Inc (NASDAQ:FB) bought the messaging app Whatsapp for $4 billion in cash, $12 billion in stock along with $3 billion in restricted shares. Though the analysts are little sceptic about this deal because every internet takeover that’s more than $10 billion has failed. However, CEO Mark Zuckerberg said that Whatsapp is more than that and the time will prove it.

Concern for Telecom companies

Facebook Inc (NASDAQ:FB) and Whatsapp coming together can give communication companies all over the world a run for their money. Only few days back, it was declared that Whatsapp may launch voice calling option. The MMS and SMS services are already on the verge of extinction after a host of messaging apps, and voice calling may also see the similar fate. Before Whatsapp, there have been a range of applications like Skype, Viber, WeChat, Tango, but none of them caught the attention of the masses.

Mobile companies are not much concerned with Facebook-Whatsapp deal as according to them, in the past, also many VoIP services were launched and Whatsapp service would also have limited market share just like services from Skype, Viber and others. Data revenues are increasing for the mobile companies, and they remain confident about their voice incomes and network expansion. However, if the voice income gets hurt by the advent of new internet based services then these mobile companies would be left with no option, but to act fast and efficiently.

A win-win deal

Jaon Koum, the previous owner of Whatsapp will join the Facebook Inc (NASDAQ:FB) board, and after taxes he takes away $6.8 billion. Co-founder Brian Acton, an ex Yahoo engineer, who was not taken in by Twitter and Facebook previously when he applied for jobs there, will bag $3 billion after tax. The venture firm, Sequoia Capital will take away $3.5 billion-a 60 times return on its $58 million investment.

Facebook completed its tenth year recently, and since its start the company has shown stellar performance with a customer base of more than 1.2 billion users worldwide. However, the website has been confident about its core functionality and kept it as it is over past 10 years. The experts are not sure that what has led Facebook to attain this success. However, teenagers are losing interest on the website compared to the older users. In emerging markets, however, this largest social networking site is expanding rapidly in countries like India, Brazil and Africa. Also, with Whatsapp in its kitty now, Facebook Inc (NASDAQ:FB) can be sure that the teenagers would spend more time on the site if it is able to integrate the messaging app efficiently.