Uninor – Rationalizing Tariffs with Deep Pockets

Uninor / Telenor India Revenues for Q1-2013 degrew 30% affected from the scale of 13 to 6 circles, but organic revenues in the six operating circles grew 7%. Uninor added 1.4mn VLR subs in the 6 circles during the quarter, with a churn of 5% from 12% previously. Uninor does not look to lower the aggression which could cap any expected RPM hikes by incumbents like Airtel and Idea.

ARPU and MOU have also increased 5% and 10% respectively to INR94 and 401/subs/month. It has reduced the RPM by 3% during the quarter, offering current RPM of 24paise/min. With an arbitrage of 11 paisa./mins vs incumbents (idea, Bharti RPM at 35paise/min), it continues to fight for market share with lower price offering.

Management mentioned strategy to get large net subscriber additions to turn breakeven, indicating the company’s aggression to grab market share and improve margins. Management highlighted that it remains on track of fully operational breakeven target by FY13E under the peak funding requirement of INR155bn. The current accumulated losses sum up of INR139bn, thus the roadmap to profitability is expected to be soon, giving it stronger wherewithal to compete.

With a strong presence in the fast growing 6 circles, continued aggression to gain market share by lower price offerings and a liberalized 1800mhz spectrum.

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