?All customers are not equal,? firmly declares Stephan Kercza, HUB head, Tamil Nadu and Kerala, Uninor. Uninor is the joint venture between the real estate major Unitech and Norway-based mobile services provider, the Telenor Group. Telenor ranks sixth among the world?s mobile service providers. It is a Norwegian government-owned company that prides itself in providing high returns to its shareholders. The Telenor Group has over 150 years of telecom experience and is present in 13 countries. It had 172 million mobile subscribers as of Q3 2009. The company holds a pan-India licence to offer mobile telephony services in 22 circles. It has also received spectrum to roll out services in 21 circles.
In an already crowded market, Uninor has entered as the 14th (or in some circles, 12th) player.
It launched its GSM mobile telecom service across seven circles in mid-December. ?We still see a huge potential here,? says Kercza. ?The population of the country is 1.2 billion, and there are still enough customers for us to target.? Uninor believes in customer segmentation. It wants to target only those customers who will benefit from its services. It is looking at the upper end of the market. With the existing call rates, Uninor realises that its billing has to be at a much higher rate. Which is why Kercza says that all customers are not equal. ?There is nothing called one-size-fits-all for India.?
However, Uninor is also offering ?value for money? schemes. It has not copied the per-second billing like the rest, but has, in fact, taken the tariff war a step further by offering a 29 paise per minute (less than half-a-paisa per second) plan, and by charging less for talking more and so on! Kercza says that Uninor understands cut-throat competition. In the Nordic countries where Uninor comes from, competition is fierce. In Denmark (where Kercza was chief marketing officer of Telenor), there are five operators for a population of five million. Telenor is naturally the number one player in Norway and the second largest operator in Sweden and Denmark. In Bangladesh, it entered as the 4th operator and is today the market leader. In Malaysia and Thailand, too, it has climbed up to the second position. It has been able to capture the market in Pakistan (number 2) as well.
Will Uninor be able to repeat its success story in India? The Tamil Nadu and Kerala circles, which Kercza heads, are known to be the toughest markets in the country. Tamil Nadu, in many ways, is a very different market. Mobile density in Chennai is much higher than the national average. There are dominant local operators like Aircel who do not yet have a major all-India presence and they tend to guard and protect their turfs. There is a huge gap between gross additions and net additions of customers. The difference is not so huge in the other Southern states. The cost of acquisition of customers is particularly high and it has its impact on revenues and margins. Even existing players are not having an easy time in this region. According to telecom analysts, the average pay out to acquire a customer is around Rs 140 in Tamil Nadu. The tariff wars have led to falling ARPUs (average revenue per user). The retailers and distributors do far better than the service providers in Tamil Nadu!
As Uninor believes in segmenting customers, it is now seriously targeting the youth market. India has the highest youth population amongst growing economies. As a columnist of this paper points out, for the next three decades the country?s population will have the youngest median age of any major economy. ?We have to focus on the younger generation. They are so demanding and they tell you what to do. Cell phone is their identity. But there is also an opportunity here,? says Kercza.
While conceding the job ahead is very tough, Kercza is optimistic. ?We are constantly studying the market, doing surveys, getting feedback, familiarising people with our brand.? Uninor has gone on an advertising blitz in the region, targeted at the youth. Its logo is visible from every nook and corner of the city. ?People have started identifying us with the logo. We have done it in three months.? The company hopes that the quality it offers is very attractive. It has already established five exclusive shops. It has hired sales people to be close to customers. ?Our progress all over India has gone according to our plans. Acquiring one million customers won?t take us too long.? While one million is a good number in smaller countries to sustain business, in India it does not mean much.
Competition is not sitting still. Bharti may have its hands full with its African acquisition. But just a few days ago, Videocon chairman Venugopal Dhoot launched the group?s GSM mobile services in the country. The company has begun its operations from Chennai, adding to the crowd. Videocon plans to invest up to Rs 14,000 crore in the GSM business over the next three years. Dhoot has said that that he wants to be among the top three service providers in the country within the next three years. To make that happen, Videocon plans to roll out services in 100 cities in 100 days and become a pan-India operator by September this year. Its tariff rates are likely to be below one paisa per second.
Kercza says that Uninor has the deepest respect for its competitors, but nothing is impossible. ?We will get more customers and the right customers by 2011.? Its EBITDA (earnings before interest, tax, depreciation and amortisation) break even is expected to be in three years. Uninor hopes to get a market share of 8% by 2018. Like every other operator, it is waiting for the government to allow number portability that will help dislodge loyal customers from others. ?There is room for us in the Indian market,? says Kercza.
sushila.ravindranath@expressindia.com