Uninor, one of the latest entrants in the Indian telecom market, is banking on innovative and cost-efficient business models to achieve faster break even levels.
The company, a joint venture between Unitech Wireless and the Norwegian telecom major Telenor ASA, hopes to break even in terms of EBITDA (earnings before interest, tax, depreciation and amortization) margins in three years. It also expects to achieve the operating cash flow break even in five years.
Uninor's break even targets appear formidable especially at a time when the mobile tariff in the country has bottomed out, putting serious pressure on the margins of the operators.
“Our cost-efficient and innovative business models will help us achieve faster break even levels. Besides sharing the passive infrastructure, Uninor has cut costs by outsourcing its entire IT operations to Wipro Technologies and also by leveraging Telenor's network with the equipment suppliers”, said Rajeev Bawa, executive vice-president (corporate affairs), Uninor.
Uninor today launched its mobile services in the Orissa circle. Before this, the company is already present in seven circles in the country.
The company earmarked an investment of Rs 155 billion (Rs 15,500 crore) till 2018 on the mobile operations in India. Telenor has 67.25 per cent stake in the company with the remaining shares being held by Unitech Wireless.
With the telecom market in the country already crowded and poised for consolidation in the future, Uninor is also exploring possibilities of acquisition of smaller operators.
“We are open to it (acquisition) whenever an opportunity comes but right now our focus is to penetrate deep into the Indian market. The Indian telecom market is poised for consolidation and we believe that in the next 10 years, there will be 6-7 telecom players in the country”, said Bawa.
He refused to spell out the company's targeted subscriber base but said Uninor is eyeing a market share of 10 per cent by 2018.
The company, which has got the license to operate in all the 22 telecom circles of the country would extend its footprint to Kolkata, West Bengal, Mumbai, Maharashtra and Gujarat circles by March 2010.
Apart from its strong focus on the mobile services, it is also mulling foray into new lines of business like broadband and Wi-Max services.
The company has set up 2,25,000 sale points and appointed close to 1,000 exclusive distributors throughout the country. The company has created 11 hubs for 22 telecom circles.
“In Orissa, we have set up 13,762 sales points and have signed up 50 distributors. Right from the day of launch, Uninor has a presence in all the major towns across 29 districts of the state and we hope to cover the entire state soon”, said Akash Das, executive vice president of Kolkata hub which includes Kolkata, West bengal and Orissa circles.