New Delhi: Norwegian telecom firm Telenor became the 12th mobile operator in India on Thursday, setting a goal of 8% market share by 2018 amid an intense tariff war in the world’s fastest-growing wireless market.
Telenor, which last year bought into nascent Indian telecom firm Unitech Wireless, a unit of realty firm Unitech Ltd, started services under the Uninor brand in seven of India’s 22 mobile zones, and plans to expand to five more early next year.
The company would charge 29paise (about 0.6 US cents) per minute for local calls and 49paise for national long distance calls, staying away from a per-second billing plan that most mobile operators have recently announced.
“Per-second billing is not necessarily a feature customers are looking for,” Telenor Group chief executive Jon Fredrik Baksaas told reporters after the launch. “We will have a fair share of the market.”
Intense competition is driving drastic cuts in call charges in the second-most populous country, raising concerns about the profitability of operators such as Bharti Airtel, Reliance Comunications and Vodafone Essar.
Unitech Wireless expects its average revenue per user, a key profitability gauge, to be lower than the industry level in the near term before rising to the sector level by next year-end, managing director Stein-Erik Vellan said. Tata Teleservices, the No. 6 operator, was the first to launch per-second billing in India earlier this year. At one paise per second, the offer was a roaring success with customers.
Mobile services leaders Bharti Airtel, Reliance Communications and Vodafone Essar have all since launched the per-second billing, a move analysts have said will significantly dent their profit margins.
Even before the current price war, Indian call charges were among the lowest in the world at around Rs1 per minute.
Lower tariffs have driven incredible growth in India, lifting the subscriber base to more than 480 million from less than 1 million a decade earlier, but companies are reporting declines in average minutes of usage and therefore muted revenue growth.