FreeCharge to take 5-10 years to turn profitable

Snapdeal-owned FreeCharge said on Thursday it would take the company between five and ten years to be profitable.

Govind Rajan, chief executive officer at FreeCharge, the online facility to recharge any mobile phone or data card, said, "In the next four to five years, our objective is to grow. It is not that profitability is not an objective but we first want to grow. When the market is growing and is in a development stage, you have to be focused on that."

On being asked the profitability horizon, he said, "I don't know. Maybe five, maybe 10 years before FreeCharge is profitable. It is not a sustenance problem, as new customers are coming in and it is not the same customer you are serving."

On Thursday, FreeCharge said it had partnered with Indus OS, which has a little over six million users, to offer recharges and payment services through direct integration on smartphones that use the platform. FreeCharge's recharge services will be initially anchored in the Indus OS phone dialler that manages calls.

FreeCharge claims to be the fastest growing in the segment over the past 12 months. Its operations began 15 months earlier. Around 70% of its business comes from the top eight cities. The average transaction size for a customer has risen from Rs 150 to Rs 300; for merchants, it has dropped from Rs 700 to Rs 500, "as consumers are using us more often post demonetisation'.

Rajan says their biggest competitor is cash. "Paytm is not my number one competitor; cash is. The minute one starts thinking of Paytm as the number one competitor, you tend to do what Paytm does. We want to be clear, we are going after consumers who are transacting digitally, through use cases, whether it's merchants like Swiggy, Dominoes, IRCTC. We are not a payments bank or have any aspirations to do so, as we don't want to fight or compete with banks."

Paytm Payments Bank would start operations next month. The company is going to transfer its e-wallet business to the bank, a requirement of RBI.

FreeCharge has become the second largest player in the wallet sector after Paytm, say market experts. "If one goes to large players such as Shoppers Stop, one would find we are much larger than people think we are. We do not talk about it because talking is cheap. Do I think we are bigger than Paytm? I do not think I am. Am I getting there? I think I am. Do we think there are other players we worry about? The answer is no," Rajan said.

He added that FreeCharge was open to strategic partnership and talks were always on with probable investors or partners. "Kunal (Bahl, founder-CEO of Snapdeal) also said it long back, that there is a lot of interest but we are in no hurry. In this industry, everybody is talking to everybody. We have requisite funding at this point. When we have something to announce, we will," he said.