Uninor would not only be a 2G company: Vivek Sood

Interview with CEO, Telewings Communication Services (Uninor)

Uninor, the Indian arm of Norway’s telecom firm Telenor, is evaluating acquiring spectrum in new circles and a possible merger or acquisition to expand its operations in the country. In an interview with Mansi Taneja, Telewings Communication Services (Uninor) CEO Vivek Sood says the company will not be only a 2G player and will introduce new data services depending upon the demand. Excerpts:

Uninor’s focus is on offering voice services. What growth are you seeing in the voice segment when other companies are moving towards data. What are your plans for offering data services?

Our strategy will be to offer basic Internet services to first-time users along with

voice services. Affordability of these services  will be a key driver of growth. Uninor’s internet penetration of 25 per cent is as good as that of incumbents because of affordability. Customers using our Internet services such as Facebook, WhatsApp pay just one-third of the price being charged by our competitors.

Will you expand your operations to more circles? What is the target for becoming a pan-India player?

There is a perception that to survive in India you have to be present in 22 circles. If you look closer, even for the players with a pan-India presence, not all their circles are profitable. Uninor’s circles (UP West, UP East, Bihar, Andhra Pradesh, Maharashtra and Gujarat) cover over 50 per cent of India’s population. These are areas where telecom penetration is the lowest, providing us good opportunity to grow. But this does not mean we will limit ourselves only to these circles.

In the February 2014 auction, the company acquired a new circle, Assam, along with additional spectrum in four of its existing circles. We will launch services in Assam later this year.

There have been reports of merger talks with Tata Docomo. Also, is Telenor looking to acquire a pan-India telecom player?

We cannot comment on market speculation. When the time is ripe, mergers and acquisitions will naturally happen. But there are regulatory clauses on M&A that need to be clarified and it is one way of expanding our presence. Spectrum sharing and trading is another route and even auctions give us an opportunity to acquire new circles.

You are offering services on a 2G platform in all your circles. What is the plan of launching data services?

The mass-market consumer is not concerned about the access technology. Today, the mass-market usage is served better with affordable tariffs using the 2G/EDGE platform.

However, we will not be 2G forever and will introduce more sophisticated services as and when we see the demand. We are investing in technologies and network that are future ready. However, we will need sufficient spectrum in contiguous blocks in relevant frequency bands at the right price for new technologies to be rolled out. We have tested Narrow Band LTE in 1800 MHz and the results are encouraging.

How big is the Indian market for Telenor in terms of revenue and subscribers?

Uninor is the second largest contributor to the Telenor group in subscriber numbers and contributes around 4 per cent of its total revenue. We have demonstrated the financial success of the operating model and ability to turn profitable with the lowest tariffs. Our mass-market strategy has proven to be a successful business model in India and in Asia.

The talent groomed at Uninor is helping the Telenor group roll out services in Myanmar and transforming other established operations like in Thailand, where the cluster-based model is being implemented. The success of the Indian operations is a source of learning for many of our business units.

Uninor has posted operating profits for the first time in 2014. What is the target for turning cash positive?

In December 2013, Uninor became the first operator to post a positive operating cash flow in four years of launch. Last year, we invested Rs 500 crore in network expansion with addition of 5,000 new sites. This year, we plan to consolidate our operations.