Uninor breaks even in five of six circles

Company to keep tariffs low than competitors, expand into smaller towns, villages

Norway’s Telenor-backed GSM operator Uninor, on Thursday, said that it has achieved operating break-even in two more telecom zones – Uttar Pradesh (West) and Bihar (which includes Jharkhand).

Uninor has 5.2 million subscribers in Uttar Pradesh (West) and 4.3 million users in Bihar (including Jharkhand).

With this, Uninor has reported operating break-even in five of the six circles where it operates.

“We are on schedule to achieve break-even in the Maharashtra (including Goa) telecom circle by end of this year as targeted,” said Yogesh Malik, CEO, Uninor.

Uttar Pradesh (West) and Bihar (including Jharkhand) are the two telecom zones that have lowest average revenue per user (ARPU) and higher energy costs, he said, adding that Gujarat and Andhra Pradesh have lower energy cost and higher ARPU.

The Indian entity of Telenor has already reported operating break-even in Uttar Pradesh (East), Gujarat, Andhra Pradesh.

Malik said that the company would continue to follow its ‘sabse sasta’ model keeping its tariffs about 40% lower than its competitors. In some cases, the tariff is as lower as 60%, he added.

“We have been able to bust prevalent myths that efficiency needs scale and profitability needs high-end services with expensive tariffs,” said Malik.

Going forward, Malik said, Uninor will expand further into smaller towns and villages with its pre-paid services targeting the mass market. Uninor has a network of more than 2,890 sites and a retail footprint of 56,285 points of sale in UP (West) and 2,442 sites and 50,000 points of sale in Bihar (including Jharkhand).

Uninor has also introduced a concept of micro-distributors – one person business serving as distributor, retail executive and activation officer combined, in UP (West) to further penetrate the market.

However, Malik declined to comment on if the company will id for new circles in the upcoming auction.

“We have potential to cover every second Indian. There is huge scope. But, we are yet to take any decision on fresh investments. Our focus is to stay healthy and strong in all the six circles we operate in at present,” he added.

Uninor had to trim down its operations in India after its operating permits in 13 telecom zones were quashed by the Supreme Court order. In November last year, the company had secured fresh licences for six telecom circles — Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West, Bihar, Gujarat and Maharashtra, in the recently closed auction of 1800 MHz spectrum.

Telenor had entered Indian market in 2009 through a joint venture (JV) with real estate giant Unitech Group but now has bought back its stake in the JV. The Norway-based telecom service provider, which would operate in India under the name of Telewings Communication Servives has recently sold a 26% stake to Mumbai-based Lakshdeep Investments & Finance.

Recently, Telenor has received approval from the Foreign Investment Promotion Board (FIPB) to increase its stake to 74% from 49% now in the Indian entity. According to its proposal before FIPB, this will require an investment of about Rs 1,000 crore.