Ahead of its $116 million IPO, Truecaller says India's upcoming data protection bill may affect future earnings

• India contributes 69% to Truecaller’s revenue, so even a minor impact coming from India could have larger implications for this Sweden-based company.
• The personal data protection bill aims to ensure that personal data of Indian citizens is safeguarded and not stored overseas.
• Truecaller claims to be the third largest communication platform in India, after Facebook and WhatsApp.

Caller identification and spam blocking app Truecaller — which will soon go for an initial public offering (IPO) in Nasdaq Stockholm, Sweden — is worried that India’s personal data protection bill may end up to be a business risk for the company.

The personal data protection bill is yet to be approved by the Indian parliament. Any data that can identify an individual — like names, addresses, financial information, IP addresses, cookies, device IDs and other data — are covered under the Personal Data Protection Bill, 2019.

The bill includes requirement of notice and prior consent to use individual data, which limited the purpose for which the companies had processed this data for. These restrictions are put in place so that only necessary data is collected. The Indian government with this will wants to ensure that personal data of Indian citizens is safeguarded and not stored overseas.

Truecaller highlighted this bill as one of the risks factors to its business in the IPO prospectus. It plans to raise SEK 1 billion, which is about $116 million.

What does Truecaller say?

“If adopted, the act, which is broadly modelled on the GDPR [European Union’s General Data Protection Regulations] will establish a mechanism for protection of personal data and would set up a national data protection authority. It is possible that this act, if adopted and depending on the final form, could have unanticipated adverse effects on Truecaller’s business,” Truecaller said, in the IPO prospectus.

“Additionally, if third parties that Truecaller works with — such as advertisers, service providers or developers — violate applicable laws or Truecaller’s policies, these violation may also put Truecaller’s information at risk and could in turn have an adverse effect on Truecaller’s business, revenue and financial results,” the company added.

Penalties proposed under the data protection bill, 2019

Offence	Penalty
Processing or transferring personal data in violation of the bill	Fine of ₹15 crore or 4% turnover, whichever is higher
Failure to conduct data audit	Fine of ₹5 crore or 2% annual turnover, whichever is higher
Re-identification and processing of de-identified data without consent	Imprisonment of up to three years, or fine, or both

Why will a regulation in India impact Truecaller’s overall operations?

The personal data protection bill will impact Truecaller’s operations in India, which contribute about 69 percent to its overall revenue. So even a minor impact coming from India could have larger implications for this Sweden-based company.

	January-June 2020	January-June 2021
Operating revenue (global)	SEK 169,538,000 ($19 million)	SEK 424,670,000 ($48 million)
Loss for the period	SEK 36,413,000 ($4 million)	SEK 117,622,000 ($13 million)

Truecaller is the third largest communication platform in India, after Facebook and WhatsApp. About 73% — or 205 million — of its 278.1 million monthly active users are from India. It also counts companies like Uber India, Swiggy, Airtel, Flipkart, Byju’s, Urban Company, HDFC Bank, Unacademy, among others, as its key customers.

India is also the biggest market for Truecaller in terms of workforce as 55% of its employees are based in the country.

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