What is Facebook worth? A view from India

College students use their smartphones to log-in on Facebook.

I couldn’t help but notice my taxi driver’s spanking new Nokia phone on a recent ride in Mumbai. 

No, he wasn’t carrying the high-end Lumia “smart phone” (retail price about 30,000 rupees, or $611), but it certainly wasn’t a basic phone either. It had a qwerty keyboard, wi-fi and Internet access. Pankaj, the taxi driver, said it cost him a cool 6,000 rupees, roughly a third of his monthly income.

Impressed, I asked him “What do you use the Internet for?” 

“Facebook,” he said. 

“You are on Facebook?” 

“Yes, of course.” 

“How much do you pay for net access?” 

“99 rupees (about $2) a month.” 

For Pankaj, Facebook was the main reason to sign up for an Internet plan. While unlimited Internet plans in India cost north of 750 rupees a month ($15 a month), metered plans, or those based on downloaded amounts, start at 99 rupees for 1GB ($2 a month). 

He isn’t alone. Go onto most any mobile carrier’s Web site in India and there is a social networking tab describing how to get onto Facebook. Facebook is prominently featured in many mobile carrier advertisements as a reason to get a data plan. One carrier, Vodafone, even introduced a phone that offered unlimited Facebook use for a year, free with the 3,810 rupee phone purchase. 

With over 40 million users and growth of more than 1 million users per month, India is already Facebook’s third-largest market. That growth, much like India’s Internet usage, is coming not just at the top of the economic pyramid, but across it. 

Facebook users represent one of the youngest and most attractive market segments in India. To reach this group in its entirety, companies have few options because of divisions in language and education. Pankaj may watch Hindi-language television shows, his wife may read Gujarati newspapers and neither may read a magazine. India’s crowd-pleasing staples, Hindi movies and cricket, may be the only other ways, outside of Facebook, to reach this group. 

And India is expected to surpass the United States as the largest Facebook user base sometime in the next five years. 

As investors ponder the value of Facebook, users like Pankaj might be worth considering. After all, he earns approximately $300 a month and was willing to spend $2 a month to access the Internet, just to use Facebook. For him, like most of us, the Internet means access to knowledge, social interaction and entertainment. And for him, the portal to that access is Facebook. With long periods of downtime as he waits for fares, he uses Facebook to communicate with his friends, play games and “learn,” he said. 

When number crunchers try to evaluate the value of a Facebook user, one Holy Grail question has emerged: What if Facebook could charge its users $1 a month? With 750 million users that would lead to revenues of nearly $10 billion a year from user charges alone. 

The question is purely hypothetical. Facebook’s founders have long pledged that they won’t charge its customers. After all, the company derives its power from its user base. But Pankaj shows that Facebook has become such an indispensable part of the lives of folks around the world that they are, in effect, willing to pay for it. 

Reams have been written and will be written about the value of Facebook before its initial public offering later this year. Like Google in its early days, Facebook may not have figured out all the ways to monetize its massive customer base, but the view from India is clear – it has grabbed the interest, and the income of users, rich and poor alike. 

-NyTimes