To survive in a cut-throat competition, telecom operator Uninor wants to focus more on value and less on volumes. From just taking on new customers, it would rather have subscribers who are “active” on its network. With this value addition, it is looking at graduating into the mid-tier category, just below the top three — Bharti, Vodafone and Idea Cellular.
Uninor — a joint venture between India’s Unitech and Norway’s Telenor — may have been hitting the headlines for all the wrong reasons, but for its subscribers it offers one of the most competitive pre-paid tariffs in the country. That has already ensured a subscriber base of around 26.3 million. But as the latest data from the Telecom Regulatory Authority of India (Trai) suggest, 55 per cent of its total user base is active. And it is them that Uninor wants to increasingly focus on.
“We have set a target of achieving a decent number of active subscribers by the end of the next year. Our methods of calculating active subscribers are also more stringent. If a SIM card is not used for a month, we do not consider it active,” said Rajiv Bawa, executive vice-president of corporate affairs.
On one hand, Uninor will continue to focus on its no-frills offering by sticking to pre-paid voice and basic value added services but the attention will be on increase usage among its subscribers. More usage would mean more revenues per user and that would add to the profitability of its operations, which are still in the red.
The operator, which does not offer premium services like 3G or even post-paid connections, claims to offer value for money. “Our ‘onnet’ (within the network) calling rates are extremely competitive, because there are no termination charges and since the subscriber base is small, we have space in the network as well,” said Bawa. Its most aggressive value-added service offering is music downloads which come in unlimited offers.
Uninor’s business model is somewhat contraction in a sector which has seen most operators scurrying for subscriber volumes in the last few years, thereby affecting their margins and revenues. The popularity of multiple SIM usage made matters worse for the operators.
"When consumers have multiple SIMs, the monthly spend on a SIM tends to spread across all of them. We are trying to get as much mobile usage as possible by offering plans which help the minutes of usage go up," said Bawa.
The company is hoping that its new strategy will improve its ARPUs of Rs 97/month further. The top 3 operators in India on an average have an ARPU of over Rs 150/month while for the mid-tier players, especially in the pre paid category it hovers around Rs 120/month.
Even as it started operations in December 2009 with operations in the South, the operator now operates across 13 circles, after launching most of its operations in June last year. It said that it has already garnered the fifth or sixth highest revenue market share in four circles. Overall, Uninor has around three per cent revenue market share across the country. It has set a long-term target to achieve eight per cent revenue market share by 2018.
"We have also not changed our target to become EBIDTA breakeven in three years," said Bawa, even as the company like many of its peers is struggling with the pressures of the sector like low margins, low tariffs, scams and the related fund raising glitches. Uninor too is facing such troubles after bankers got jittery to lend to the sector. The company was planning to raise around Rs 8,500 crore as long-term debt. But eventhough they almost closed the loan, their plans went haywire after the 2G scam investigations started. It is now surviving on Rs 5,000 in short-term loans, after it's plans to go for a rights issue were thwarted by partner Unitech.
But even with all such worries in place, Uninor claims that it are well on course to achieve breakeven targets. Last quarter, it reported a 27 per cent increase in revenues. In eight circles, the company has applied for additional spectrum in the currently prevalent subscriber linked method for getting new spectrum. "This itself is an indicator for our performance," said Bawa.
