Uninor launches GSM services in 7 circles

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India's crowded telecom industry - and the fastest-growing in the world - saw another high-profile entrant with the services launch of Uninor, a collaboration between realty giant Unitech's telecom arm and Norway-based Telenor Group.

On Thursday, Uninor announced the launch of GSM services in seven circles including Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Uttar Pradesh East, Uttar Pradesh West and Bihar (including Jharkhand).

In March 20009, Telenor picked up a 67.25% stake in Unitech's telecom arm Unitech Wireless, which was later rechristened Uninor.

"It has been highly satisfying to witness today's launch of Uninor services across India. By providing quality mobile services, I strongly believe that Uninor will bring about a significant and positive impact in the daily lives of its customers in India", said Jon Fredrik Baksaas, CEO and President of the Telenor Group, at a press conference.

Uninor's seven-circle launch (out of 22 circles in India) makes it the largest single-day launch by any operator and would cover a footprint of about 600 million people, it said.

"With launch in seven circles and roaming agreements in place for the rest, we have started our service in India on day one as a pan-Indian national operator," said Stein-Erik Vellan, Managing Director of Uninor. "While our launch today is indeed a milestone in a longer journey to become a significant operator in India, we are delighted to have made such a strong start."

No to pricing war

In an exclusive interaction with CNBC-TV18, Unitech Managing Director Sanjay Chandra said Uninor would not enter the tariff war. India's telecom space, the second-largest in the world after China, has seen an intense pricing war in the fast few months.

Telenor's move into India is likely to be followed by new launches by United Arab Emirate's Etisalat and Bahrain's Batelco, as existing firms scramble to sign up users by drastically dropping call charges.

Tata Teleservices, the No 6 operator, was the first to launch per-second billing earlier this year, deviating from the industry norm of per-minute billing. The offer was a roaring success.

Mobile services leaders Bharti Airtel, Reliance Communications and Vodafone Essar have all followed suit and launched the per-second billing that, analysts said, will significantly dent profit margins of the operators and average revenue per user (ARPU).

However, Chandra said, unlike other players, Uninor would not be offering 1-paisa-per-second billing. "We want to tap the upmarket customers with rich ARPUs," Chandra said.

Uninor would charge 29 paise per minute for local calls and 49 paise for national long distance calls, staying away from a per-second billing plan that most mobile operators have recently announced.

Chandra said Uninor was still evaluating whether to participate in the government's 3G auction, which also has seen several delays. The telecom player has no plans to list on the stock markets for the next three years, he added.

Uninor's peak funding requirement is Rs 15,500 crore and it would be operating across all circles by mid-2010, Chandra said. He added that the company was maintaining a target to break even on in its EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) in three years.

Last month, Telenor CEO Jon Fredrik Baksaas said the company would price its call charges in India competitively but would not be the most aggressive.

The company is aiming for an 8% share within five years of the India launch.
India has more than 480 million wireless subscribers and the market is growing rapidly with an average 14 million new users a month this year.

- With inputs from agencies