New telco Unitech Wireless has been renamed Uninor following the collaboration between Norwegian telecommunications giant Telenor and realty firm Unitech Ltd. Telenor’s subsidiaries also have different brands – Digi in Malaysia, dtac in Thailand, Grameenphone in Bangladesh, Promonte in Montenegro. The company does not have a website up as yet though it booked the domains Uninor.in as well as Uninor.co.in on September 11, 2009. It missed out on uninor.com, which is up for sale according to a notice on that site.
Telenor, which claims to be the 6th largest telco in the world, currently owns 67% stake in Uninor. Uninor’s attempts to increase FDI to 74% have been deferred by the government. The telco will roll out its services by the end of 2009. Uninor expects below-average ARPU in the first few years and is targeting 8% pan-Indian market share by 2018; EBITDA break even is expected in three years.
Low-Cost Operational Model, Hubs & Management
Uninor is adopting an economical growth strategy to gain long term capex efficiency by gradually building its network, sharing infrastructure (towers), obtaining GSM equipment at competitive costs and resorting, as other telcos have, to full-scale IT services outsourcing. It has outsourced its entire IT services to Wipro and is in a tower sharing arrangement with Wireless TT Info Service Ltd, the Tata-Quippo joint venture. This move has led to 75% capex saving per site compared to if the company had set out putting up its own towers. Uninor has also secured inter-circle roaming agreements and is now in the network planning stage, according to a company presentation.
It will set up 11 hubs for region-wise management – six of them are already up. The Bangalore centre will handle entire Karnataka, Chennai both Tamil Nadu and Kerala circles, Mumbai – Maharashtra and Goa, Hyderabad for Andhra Pradesh, Delhi will take care of Rajasthan, NCR, Uttar Pradesh and the capital and Kolkata will cover Orissa and West Bengal.
Uninor already has 900 employees on board and the management team is also falling into place.
The company talks of ‘tailoring’ its offerings for different circles and focusing on select markets where it can build up its brand, but there is no mention of plans to tap into rural India. Even as established operators are looking to the hinterland for growth, and adding value added services such as crop information, weather reports, etc to lure the rural mobile users, Uninor appears to be focused only on cities, where ARPUs are higher.
Flailing ARPUs, intense competition with 6-8 operators in most circles and high churn which is set to rise with other new telecom operators rolling out – S-Tel, Datacom and Etisalat DB India are characteristic of the Indian telecom scene. To succeed, new telcos such as Uninor will need to launch radically new offerings to boost ARPUs.
According to a company presentation, ARPU is expected to decline over the next few years before stabilizing. Spectrum will become scarce especially in urban areas, which is when we can expect to see more MVNO partnerships. Will Uninor be ready for the swarm? Tata Docomo came up with a granular pricing strategy and Aircel with a VAS spin – what will be Uninor’s USP?