A MINOR PROJECT REPORT

ON

A STUDY OF CHALLENGES FACED BY UNINOR

Submitted in partial fulfillment of requirement of Bachelor of Business

Administration (B.B.A) General

BBA IIIrd Semester (Morning Shift)

Batch 2016-2019

Submitted to: Submitted by:

Reeta Nagari Nimisha

Designation 02714101716

JAGANNATH INTERNATIONAL MANAGEMENT SCHOOL, KALKAJI

1

Student’s Undertaking

This is to certify that I have completed the Minor Project Report titled” (A STUDY OF CHALLENGES FACED BY UNINOR)” under the guidance of “(Ms. REETA NAGARI)”

in partial fulfillment of the requirement for the award of Degree of “Bachelor of Business Administration” at “Jagannath International Management School, Kalkaji”, Delhi. This is an original piece of work & I have not submitted it earlier

elsewhere.

Project Guides: Reeta Nagari

(By NIMISHA)

Faculty: Reeta Nagari

2

ACKNOWLEDGEMENT

It is my great privilege to thanks to Mrs. Rashmi Bhatia (coordinator of BBA) for giving

me this opportunity and support to complete this project.

I also sincerely thank to my guide Mrs. Reeta Nagari without whose support and

guidance it wouldn’t be possible to complete the project.

I also thanks to my non teaching staff , parents, friends and colleagues for their

encouragement and support.

Nimisha

3

CERTIFICATE OF COMPLETION

This is to certify that the Project work entitled “A STUDY OF CHALLENGES FACED BY UNINOR “submitted by “NIMISHA” in fulfillment for the requirements of the award of

“Bachelor of Business Administration” from “Jagannath International Management School, Kalkaji” New Delhi is an authentic work carried out by his/her under my

supervision and guidance. To the best of my knowledge, the matter embodied in the

project has not been submitted to any other University / Institute for the award of any

Degree.

4

CONTENTS OF THE SYNOPSIS

LIST OF TABLES5

Description Page No.

Acknowledgement 3

Certificate of completion 4

Contents with page no. 5

List of tables 6

List of figures 7

Executive Summary 8

Introduction to topic 17

Objectives 18

Literature review 19

Company Profile 24

Research Methodology 30

Findings & Inferences 32

Analysis and Findings 37

Recommendations and Conclusion 65&66

Appendices & Bibliography 68

References 69

LIST OF FIGURES/PICTURES

S.no Figure title Page no.

6

S.no Table title Page no.

1 Uninor 8&9

2 Telecom circle 12

3 Indian Telecommunication Report 20&21

4 Key figures of Telenor 27&28

5 Q1 43

6 Q2 44

7 Q3 44

8 Q4 45

9 Q5 46

10 Q6 47

11 Q7 48

12 Q8 49

13 Q9 50

14 Q10 51

1 CEO of telenor 9

2 Telenor at a glance 25

3 Directors of Telenor 27

4 Strategy of telenor 34

5 Answer 1 43

6 Answer 3 45

7 Answer 4 46

8 Answer 5 47

9 Answer 6 48

10 Answer 7 49

11 Answer 8 50

12 Answer 9 51

13 Answer 10 52

14 Jon Fredrik Baksaas 54

15 Getting back to track 59

16 India lags 61

Executive Summary

Telenor India:

7

Telenor (India) Communications Private Limited, formerly known as Uninor, is an

Indian mobile network operator. The company is a wholly owned subsidiary of

Norwegian telecommunications company Telenor Group. In February 2017, Telenor

Group announced merging the India business with Bharti Airtel post necessary

regulatory approvals.

Formerly calledTelewings Communications

Services Pvt Ltd

Type Subsidiary

Industry Telecommunications

FateTo be Acquired by Bharti

Airtel

Predecessor Unitech Wireless Limited

Founded 2009

HeadquartersConnaught Place, New

Delhi, India[1]

Area served India

Key people Sharad Mehrotra (CEO)[2]

ServicesMobile telephony

Wireless internet

Owner Bharti Airtel

Number of employees

4,010[2] (Q4 2016)

Website www.telenor.in

8

(Table 1-uninor)

HISTORY

Foundation and growth

( FIG 1-CEO OF TELENOR)

Telenor CEO Jon Fredrik Baksaas launching Uninor in 2009

The company Unitech Wireless Limited, a subsidiary of Unitech Group, was

incorporated in 2008. The same year, the company was awarded wireless services

licences for all 22 telecom circles. Subsequently, Unitech Group and Telenor Group

agreed to enter a joint venture where Telenor would inject fresh equity investments of

61.35 billion into Unitech Wireless to take a majority stake in the company. This was

operating capital invested directly in Unitech Wireless by Telenor Group. Telenor Group

conducted these investments in four tranches, subsequent to approvals from the

Foreign Investment Promotion Board (FIPB) and the Cabinet Committee of Economic

Affairs (CCEA) took 67.25% ownership of Unitech Wireless. In September 2009,

Unitech Wireless announced its brand name as Uninor.

Uninor launched in eight telecom circles on 3 December 2009, after completing one of

the world’s largest GSM Greenfield launches which was also one of the fastest telecom

roll-outs ever in India. According to Uninor, the brand was built around an ambition to

serve the young, aspiring India. Six months later, 5 additional circles were launched

including metropolitan areas like Mumbai and Kolkata.

9

Uninor has facilitated rapid scaling of the company through a lean operation model,

where a large share of the network infrastructure is outsourced to business partners.

Uninor’s modern equipment has enabled it to introduce targeted offerings and serve a

large audience with limited spectrum. Uninor introduced dynamic pricing, a concept that

gives consumers discounts that are based on current network traffic at an individual site

and change with location and time. Over the summer of 2010, the company further

simplified its strategy with a focus on three core areas – excellence in mass market

distribution, basic services and cost efficient operations. Changes were also made to

the product mix and marketing– making them simpler, more direct and clearly

positioning Uninor as an affordable mass market service.

Uninor grew from 0 to 45.6 million customers (as of Q2 2012) within less than two

years, and emerged as the most successful of the new entrants that obtained licenses

in 2008. The company had more than double the subscribers of all of the other entrants

combined.

License cancellations

On 2 February 2012, the Supreme Court of India cancelled 122 licenses of 22 mobile

operators, including Uninor. In July 2012, Uninor decided to gradually scale down

operations in 4 telecom circles - Karnataka, Kerala, Orissa and Tamil Nadu. The

objective was to strengthen the focus on the top performing circles ahead of the 2012

spectrum auction. Uninor eventually shut down services in those 4 circles. In the 2012

auction, Uninor won back licences and spectrum in 6 telecom circles - Uttar Pradesh

(East), Uttar Pradesh (West) & Uttarakhand, Bihar & Jharkhand, Gujarat, Maharashtra

& Goa and Andhra Pradesh & Telangana. Uninor was about shut down services in

Mumbai, Kolkata and West Bengal circles on 18 January 2013 but the deadline was

extended to 16 February 2013. The Supreme Court on 15 February 2013 ordered

companies that did not win spectrum in the November 2012 auction to immediately

discontinue operations.

10

Uninor shut down services in Kolkata, Mumbai and West Bengal after midnight on 16

February 2013. According to a Uninor spokesperson, almost all Uninor subscribers in

Kolkata and West Bengal had ported out by 16 February 2013, as Uninor had informed

them to do so in December 2012. The spokesperson further claimed that the "sudden

apex court order did not give us [Uninor] the opportunity to inform Mumbai customers in

advance". At the time of service shutting, Uninor still had 1.8 million subscribers in

Mumbai.

Unitech exit and re-branding

Following the cancellation of Uninor's licences, Unitech and Telenor were involved in a

dispute over control of Uninor. In October 2012, the two companies signed an

agreement under which Unitech transferred Uninor assets to Telenor and exited the

joint venture. Telenor subsequently formed Telewings Communications Services Private

Limited, a joint venture with Lakshdeep Investments & Finance. Telenor held a 49%

stake in Telewings. In December 2013, Telenor raised its stake in the company to 74%.

In 2014, the Telenor Group raised its stake to control 100% of Telewings, and the

company became a wholly owned subsidiary. On 23 September 2015, Uninor

announced it has re-branded itself as Telenor India. The Telenor Group spent 100 crore

on the re-branding exercise. The logotype, font and the visual expression follows that of

the Telenor Group. Telenor India CEO Vivek Sood also stated that the company had

broke even within four years of operations. Telewings Communications Services Private

Limited was subsequently renamed Telenor (India) Communications Private Limited.

Sale to Bharti Airtel

On 2 January 2017, The Economic Times reported that Bharti Airtel had entered into

discussions with Telenor India to acquire the latter. On 23 February 2017, Airtel

announced that it had entered into a definitive agreement with Telenor South Asia

Investments Pte Ltd to acquire Telenor (India) Communications Pvt. Ltd. As part of the

11

deal, Airtel will acquire Telenor India's assets and customers in all seven telecom circles

that the latter operates in - Andhra Pradesh, Bihar, Maharashtra, Gujarat, Uttar Pradesh

(East), Uttar Pradesh (West) and Assam. Airtel will gain 43.4 MHz spectrum in the

1800 MHz band from the Telenor acquisition.

Network:

Radio frequency summary: As of February 2017, Telenor India owns spectrum in

1800 MHz band, across 7 telecom circle areas in the country.

Telecom circle coverageGSM / FD-LTE

1800MHzBand 3

Andhra Pradesh and Telangana

Assam

Bihar and Jharkhand

Uttar Pradesh (East)

Gujarat

Maharashtra & Goa

(Table 2- telecom circle)

4G launch

In February 2016, Telenor launched 4G services in the city of Varanasi.[23] The company

deployed narrow-band LTE on 1800 MHz spectrum. The network is the world's first

commercial lean GSM network. Lean GSM is a technology developed by Huawei that

compresses data to improve the efficiency of spectrum. Telenor refarmed 1.4 MHz of its

2G voice spectrum for data, maintaining the same voice quality while utilizing less

spectrum.

12

Discontinued operations

Telenor discontinued its operations in seven telecom circle areas:

West Bengal (shut down services after midnight on 16 February 2013)

Karnataka (gradually scaled down from July 2012)

Kerala (gradually scaled down from July 2012)

Kolkata (shut down services after midnight on 16 February 2013)

Orissa (gradually scaled down from July 2012)

Tamil Nadu (gradually scaled down from July 2012)

Mumbai (shut down services after midnight on 16 February 2013)

Subscriber base

Telenor India had a subscriber base of 50,509,087 in total across India, according to

Telecom Regulatory Authority of India (TRAI) as of March 2017.

Controversies:

2G license controversy

Main article: 2G spectrum scam

Unitech Wireless was one of the would-be telecom companies that received 2G

licenses in 2008. The method chosen by the authorities to allocate these licenses has

later been subject to controversy as part of the 2G license allocation case. Licenses

were awarded through a first come-first served process, where eight companies

belonging to the Unitech Group were awarded telecom licenses. The licenses obtained

by the telecom arm of the Unitech Group were the basis for Telenor Group’s investment

into the joint venture. Unitech Wireless companies were later amalgamated into one

company, Unitech Wireless (Tamil Nadu) Pvt. Ltd. The Telenor Group invested INR

13

61.35 billion through new shares to hold 67.25% majority stake in the company. This

investment has been used as working capital for the joint venture.

Telenor’s investments in Unitech Wireless have been cleared at each stage by the

Foreign Investment Promotion Board (FIPB). Due to the controversy of the 2G license

allocation case, Unitech Ltd.'s Managing Director Sanjay Chandra together with the

company Unitech Wireless, have come under investigation by the Indian Central Bureau

of Investigation (CBI). These investigations are connected to Unitech Wireless at a point

when the company was fully owned by the Unitech Group. Subsequently, Unitech’s

Managing Director and the erstwhile chairman of the board of Unitech Wireless, Sanjay

Chandra, together with individuals from other telecom operators were taken into custody

in early 2011. He was released on bail, while the case is pending in Indian courts.

In February 2012, a special court consisting of two Supreme Court justices issued a

judgment in a public interest litigation (PIL) case connected to the 2008 allocation of

telecom circle licenses. The judgment directs the Indian telecom regulator, TRAI, to

recommend a process for re-allocation of the 121 licenses that were issued in 2008.

The court ordered this process to be concluded within four months, i.e. by June 2012.

This deadline was later extended to September 2012, then to January 2013. Uninor

services and operations continues uninterrupted.

Telenor Group on 21 February 2012 also announced its intention to form a new entity in

India with which its Indian operations will be taken forward. This new entity will serve as

the platform to approach the upcoming auctions for fresh licenses as mandated by the

Supreme Court. The new entity will also seek requisite approvals from the FIPB to allow

Telenor Group to take up 74% ownership.

Uninor on 1 August 2012 said it would auction all of its telecom business before it

becomes non-operational on 7 September, the deadline set by the apex court for

winding up of operations of all the firms whose licences had been cancelled. The move

has been strongly opposed by the firm's minority stakeholder Unitech and it has

14

threatened to initiate legal action, if Uninor goes ahead with the auction. Telenor in

August 2012 said it would buy out Unitech Wireless for "4,190 crore", if there are no

bidders for the Indian mobile phone operator's assets. A settlement between the parties

was made in October 2012 with Unitech Ltd. committing to dipose of all its shares in

Unitech Wireless, which lead to the rebranding of the company as "Telenor India" in

September 2015.

Awards and recognition

Telenor India has won many recognitions and industry awards for its business practices

and sustainability programs:

2016:

Telenor Suraksha gets Efma award in the 'Best Disruptive Product or Service'

category

Telenor India's Free Life Insurance & Rebranding Campaign, Lean GSM and

Project Sampark get 2016 Voice & Data Telecom Leadership Conference &

Award

2015:

Telenor's Project Sampark has been recognised with the Aegis Graham Bell

Awards 2015

Exchange4media IPRCC Awards 2015 under the CSR & Not-for-profit

Telenor India five times winner of the Greentech Safety Award-August 2015

Project Sampark wins award for excellence in CSR August 2015

Greentech CSR Gold Award

British Safety Council ISA

Greentech Env. Gold Award

BSC Global Sector Award

Greentech Platinum Safety Award15

2014:

CII Star Award for Safety Management

Greentech Gold Award for outstanding Achievement in Safety Management

Greentech Environment Excellence Gold Award

British Safety Council International Safety Award with Distinction

British Safety Council Global Sector Award

2013:

Greentech Gold Award for outstanding Achievement in Safety Management

Greentech Environmental Excellence Gold Award

British Safety Council International Safety award with Merit

2012:

Greentech Gold Award for outstanding Achievement in Safety Management

Greentech Environmental Excellence Gold Award

British Safety Council International Safety Award with Merit

2011:

Greentech Gold Award for outstanding Achievement in Safety Management

CHAPTER 1-

INTRODUCTION TO CHALLENGES FACED BY UNINOR

16

CHALLENGES:

Definition:

A challenge is an attempt to remove or restrict materials, based upon the objections of a

person or group. A banning is the removal of those materials. Challenges do not simply

involve a person expressing a point of view; rather, they are an attempt to remove

material from the curriculum or library, thereby restricting the access of others.

Challenge as a noun:

1. A call to someone to participate in a competitive situation or fight to decide who is

superior in terms of ability or strength.

2. A call to prove or justify something.

3. Exposure of the immune system to pathogenic organisms or antigens.

Challenge as a verb:

1.Dispute the truth or validity of.

2. Invite (someone) to engage in a contest.

3. Expose (the immune system) to pathogenic organisms or antigens.

It is the situation of being faced with) something that needs great mental or physical

effort in order to be done successfully and therefore tests a person’s ability

For example-

Finding a solution to this problem is one of the greatest challenges faced by the

scientists today

OBJECTIVES:

Aim of the Study

17

The investigation of entrepreneurship issues specifically Telenor faced while entering

Indian telecom market.

Research Objectives- To identify the entrepreneurship issues in Indian telecom market.

- To identify emerging tendency in Indian telecom market.

- To identify positive and negative situations faced by Telenor while entering Indian

telecom market.

Scope of the StudyThe study was focus on a single case of Telenor entrance issues in the Indian telecom

market.

Research StrategyThe research is base on case study analysis. The entrance of Telenor in Indian telecom

market is the case. Since this strategy is considerably able to initiate responses towards

“why” questions, thus is valuable method to investigate available assumptions.

Research MethodTo investigate the matter, related information was collected through internet sources

and observations.

Data Collection MethodOnly secondary information was used which include earlier studies relative to the

current research topic to necessitate the endorsement and comparison.

Limitations of the Study· Complexities in availability of information.

· Only secondary approach was incorporated, making it difficult to access governmental

records on industry.

· The scope of the study is very limited to only entrepreneurial business only

LITERATURE REVIEW:

18

Across the globe telecom sectors is considered the sign of socio-economic development on any country. For the moderation and growth of the economy it is very essential. The growing industry is now matured in America and Europe ,now these countries are looking at Asia ,Africa and South America the growing market of telecom and also has huge potential..The arrival of Foreign player in developing market was beneficial for both as the country gets FDI and technology and innovation and firms create its profit. But entry into any country is not easy company has to face legal political and economical and social challenges .India is world third largest in telecom sector after USA and China, with 621 million connections with a growth rate of 45% annually .Mobile subscriber are estimated to grow at a speed that by 2012 it will reach 60 billion and investment by US $ 24 billion by 2010 .Now it has tough competition with 10 national level and two governmental owned firms regardless of tough competition on prices it is still very attractive for foreign players. World Investment Forum 2008 has mentioned that India is second best considered site for business international investment, due to its large population and language. Indian telecom reforms began in 1980s and economic policy of 1991 strength it allowing private firm and foreign firms to invest in this sector.

Large MarketHuge population size India has 638,691 villages and 5161 towns with rural population of741,660,293 and urban population of 285,354,954

Growth OpportunitiesThe teledenisty of India is very low as compare to respect of world and growing demand

19

of all kind of telecom services such as cellular, fixed, v-sat, international long distance,national long distance, internet services, internet telephony, radio paging, cable networkand other value added services infrastructure and manufacturing .

Favorable PoliciesEncouraging Competition and favorable policies, liberalization and investor friendlyenvironment promote foreign investment, regulatory framework which provide equalopportunities for public private and foreign companies.

Skilled LaborThe literacy rate is very high in India. A large pool of educated workforce makes Indiacompetitive.

English Language as business LanguageThe schooling and higher education in India is in English so to access elite andexpanding middleclass is easy. Few policies made by government to smooth the inward flow of foreign direct investment were, in radio paging service and internet service , basic cellular mobile, value added service provider FDI up to 74 % (49 % under automatic routine) was allowed and 100% is allowed in Electric Mail , Voice mail ,infrastructure provider with dark fiber, no industrial license is required to set a industry for telecom equipment ,100 % FDI was allowed in for this, ,on automatic route the payments for royalties,

20

transfer of technology or the use of trade name or brand name were made ,foreign player were allowed to bring their income and capital back totheir home country. From April 2000 to December 2008 the inflow of foreign direct investment was estimated around US $ 3.62billion, it was 7.99% of total inflow of FDI in the country of that particular period. License fee is less then US $ 2 million and royalty is about 5% of domestic sales and 8% of exports in telecom manufacturing ,tax exemption on the finance through venture capital ,rebate on subscription of shares /debentures ,less import duty for many telecom equipment. A unified license for operating in all circles. A bird eye view of Indian industry is given below.

Indian Telecommunication Report ( As on 31 March 2010)

Position in the telecom world 3rd

Tele density (Per cent Population) 52.74

Telephone Connection (In Millions)Fixed 36.95

Mobile 548.32

total 621.28

Rural telephone user 569385

Uncovered villages 593601

Foreign Direct Investment (April 2000-

March 20104070

License Issued

Basic 2

CMTS 38

UAS 241

Telecom regulatory

Infrastructure Provider 219

21

ISP Internet 371Long Distance Calls 29

International Long Distance 24

(Table 3- Indian telecommunication report)

Telecom Regulatory

Besides providing telecom services India is also a leading played in telecom manufacturing has crossed investment of US $ 6.5 billion in 2008, Nokia operating in Indian area Tamil Nadu has reached in production capacities of 125 million by 2008.Hand set production will reached 107 million hand set in 2010 and revenue to US $ 13.6 billion by 2011.As Indian rural population comprises of 2/3 of its population it the need for 350000 telecom tower by 2010 was estimated.

Many foreign player came to india as a joint venture with local player and targeted the service market of telecom such as Hutchison ,First Pacific ,Avaya etc. Nokia Siemens Network has shifted its global service business office to India from Munich. In manufacturing sector of telecom a large manufacturing plant in Chennai and Sriperumbedur were established by Nokia and Motorola respectively. Another manufacturing plant was established by Sony Eicsson for GSM Radio Base Station and Research and Development center in Chennai. Samsung and LG Electronics has established GSM Mobile Phone manufacturing station in Manesar and Punarespectively.

Many companies entered in the India some are making good position, some are struggling and some even could make in short run. These failure could be

22

due to many reasons some firms ignore the socio-cultural aspect of the society considering it least important whereas population is getting educated and their awareness increases their preference changes .

Some enter with the modern and sophisticated technology but fail such as Swisscom the leading Switzerland firm failed in India this could be due to high capital expenditure, poor return or high license fee. This shows that entering in India are not easy firms had to make a strategy to face these challenges.

Swisscom was unsuccessful in service segment in Indian market as it want to lead by technical strength it did not considered socio cultural aspect, it made a good research work before entering in India and invested in cellular service and avoided competition by catering other Delhi.

They entered with a joint venture ,with great control on operation and influence in decision making but it equity was less than partner. Swisscom failure was due to external factor also as there was tough competition, rigid policies and cultural differences in managerial positions, non supportive regulatory framework, weak financial position etc led to failure of this venture.

Although English is business language but if the instructions are communicated in local languages it is preferred as India wants to cover all its villages. So language are different for different region ,Due to large area of India ,it is difficult to reach in some areas to establish towers are do wiring ,so power infrastructure is a problem is some region.

23

First Pacific is a successful company in India by targeting rural areas which was ignored by the existing pkayers.

It adopted differentiation strategy to meet the need of its target customers, such as promoting technologically good customer Service ,stressed on Research and development and technical assistant to firms that are on peak In India.First Pacific entered India by Joint venture with local partner and handed full operation control to Indian people and itself provided mostly in finance and management issues .This enabled a good running of business.

CHAPTER 2-BRIEF PROFILE OF UNINOR

Telenor India

Telenor (India) Communications Private Limited, formerly known as Uninor, is an

Indian mobile network operator. The company is a wholly owned subsidiary of

Norwegian telecommunications company Telenor Group. In February 2017, Telenor

Group announced merging the India business with Bharti Airtel post necessary

regulatory approvals.

24

The company Unitech Wireless Limited, a subsidiary of Unitech Group, was

incorporated in 2008. The same year, the company was awarded wireless services

licences for all 22 telecom circles. Subsequently, Unitech Group and Telenor Group

agreed to enter a joint venture where Telenor would inject fresh equity investments of

61.35 billion into Unitech Wireless to take a majority stake in the company. This was

operating capital invested directly in Unitech Wireless by Telenor Group. Telenor Group

conducted these investments in four tranches, subsequent to approvals from the

Foreign Investment Promotion Board (FIPB) and the Cabinet Committee of Economic

Affairs (CCEA) took 67.25% ownership of Unitech Wireless. In September 2009,

Unitech Wireless announced its brand name as Uninor.

Uninor launched in eight telecom circles on 3 December 2009, after completing one of

the world’s largest GSM Greenfield launches which was also one of the fastest telecom

roll-outs ever in India. According to Uninor, the brand was built around an ambition to

serve the young, aspiring India. Six months later, 5 additional circles were launched

including metropolitan areas like Mumbai and Kolkata.

Uninor has facilitated rapid scaling of the company through a lean operation model,

where a large share of the network infrastructure is outsourced to business partners.

Uninor’s modern equipment has enabled it to introduce targeted offerings and serve a

large audience with limited spectrum. Uninor introduced dynamic pricing, a concept that

gives consumers discounts that are based on current network traffic at an individual site

and change with location and time. Over the summer of 2010, the company further

simplified its strategy with a focus on three core areas – excellence in mass market

distribution, basic services and cost efficient operations. Changes were also made to

the product mix and marketing– making them simpler, more direct and clearly

positioning Uninor as an affordable mass market service.

Uninor grew from 0 to 45.6 million customers (as of Q2 2012) within less than two

years, and emerged as the most successful of the new entrants that obtained licenses

25

in 2008. The company had more than double the subscribers of all of the other entrants

combined.

(FIG 2-TELENOR AT A GLANCE)

Telenor India provides mobile services in 6 Indian telecom circles.

Key facts

 million mobile subscriptions (Q2 2017)

Telenor holds 100 per cent ownership interest in Telewings Communications

Services Pvt. Ltd.

 employees (Q2 2017)

Total revenues of NOK  million (2016)

Monthly Mobile ARPU: NOK  (Q2 2017)

The headquarters are located in Gurgaon, close to Delhi26

CEO: Sharad Mehrotra

Historical background

Eight months after entering into India, Telenor started offering its services in December

2009 with the biggest ever launch in Indian telecommunications history.

Telenor is committed to making long-term investments in the Indian mobile market. This

way Telenor plays an important role in improving network stability and coverage in the

country.

27

(FIG 3 -DIRECTORS OF TELENOR)

Analytical information

For detailed information on regulatory matters, network, licenses and competitors, see

our business descriptions for Telenor India.

Key Figures for Telenor India

(NOK in millions) Fourth quarter

Year

2016 2015 2016 2015

Revenues

Subscription and traffic 1.147 1.234 5.092 4.795

28

Interconnect revenues 257 191 890 750

Other mobile revenues 8 8 36 33

Non-mobile revenues 5 3 15 14

Total revenues 1.417 1.436 6.033 5.592

EBITDA before other items 127 41 434 (47)

Operating profit (loss) (45) (368) (7.320) (990)

Capex 120 489 917 1.046

No. of subscriptions - Change in quarter/Total (in thousands):

(689) 1.764 44.033 42.619

ARPU - monthly (NOK) 11 11 11 12

Exchange rate (INR) 0.1250 0.1258

(Table 4- key figures of Telenor)

Contact Information:

Address and telephone

Telenor India

The Masterpiece, Plot No. 10, Golf Course Road, Sector 54, DLF Phase 5, Gurgaon,

122002

+91-0124-3329000

Websites and social media profiles

telenor.in

facebook.com/TelenorIndia

29

twitter.com/_TelenorIndia

twitter.com/TelenorInNews

youtube.com/telenorindia

30

CHAPTER 3-RESEARCH METHODOLOGY

According to Clifford Woody Research comprises defining and redefining

problems formulating hypothesis or suggested solutions; collecting organizing

and evaluating data; making deductions and reaching conclusions; and at last

carefully testing the conclusions to determine whether they fir the formulating

hypothesis.

Research approaches

✓ Descriptive research :-

The research study is conducted through descriptive research. Descriptive research

design is a scientific method which involves observing and describing the behavior

of a subject without influencing it in any way or to identify the cause of something

that is happening.

✓ S mple size

The number of sample is 110 from N.C.R. city, which fulfills the requirement. Each

respondent is treated as a case of detailed analysis

✓ SSampling design

Convenience sampling is used for this study. Convenience sampling is used in

exploratory research where the researcher is interested in getting an inexpensive

approximation of the truth. As the name implies, the sample is selected because

they are convenient. This non probability method is often used during preliminary

research efforts to get a gross estimate of the results, without incurring the cost or

time required to select a random sample.

✓ Data collection method:

For the accumulation of data the sources were primary and secondary data.

31

✓ Primary data:

These data are raw material. They are the measurement observed and

recorded as a part of original study. They are original in character. The

investigator or researcher directly collects this data. The basic form of

obtaining this data is by observing and questioning.

The Primary data was a detailed interview schedule with the help of a detailed

questionnaire. The samples were drawn purposively from various areas for the

relevance of the study. Discussions were held with the general, branch

manager and executives of the company to design and execute the research

✓ Secondary Data:

They are not originally drawn by the researcher as fresh data. These are

collected by some other person for this purpose and published. These types of

data can be collected through various sources.

For this study the secondary data were collected from magazines ,journals ,

references and websites and manuals of the UNINOR.

FINDINGS AND INFERENCES:32

Uninor to scale down in four circles, step up in the East

The Uninor management has decided to reallocate its resources in India by shifting its

focus to Kolkata, West Bengal and seven other circles — Uttar Pradesh East, Uttar

Pradesh West, Bihar and Jharkhand, Andhra Pradesh, Maharashtra and Goa, Mumbai

and Gujarat — while gradually scaling down the company’s operations in the four circles

of Tamil Nadu, Kerala, Karnataka and Orissa.

The company said that the decision was taken in light of the continuing uncertainty

around the auction policy and timing. “We will scale down to a smaller network in these

circles, while remaining operational,” Uninor said in an e-mail response to The Hindu .

“Since launch, Uninor has remained among the top five GSM operators in Kolkata and

West Bengal. This is one of our most successful circles, and we will continue to invest

and expand operations aggressively here,” said Sigve Brekke, Managing Director,

Uninor, in a release.

Auctions

“Our plan now is to enter the auctions with an even stronger presence in the nine

circles, including Kolkata and West Bengal, auction rules permitting. We will focus

funds, resources and all our efforts to meet even more aggressive targets in these nine

circles. We are readying ourselves for a new future in India,” he said. The company said

that its intentions were to have a long-term presence in India. “We hope that the auction

rules are such that Uninor is able to participate and continue its operations in India.”

In Kolkata and West Bengal, and the other seven circles, Uninor will expand its

distribution capacity. Network coverage across the region will be further strengthened

through additional sites.

This new focus will place the company in a stronger financial and operational position to

enter the auctions, it felt.

33

Strategy of Telenor

India is one of the world's most competitive markets. Winning here requires winning

every day.

At the heart of all of Telenor India’s telecom offerings – mobile plans, call rates, value

added services, sales strategy, customer care – is the subscriber. So simply put, their

strategy is to work their way to become the best telecom brand by putting the subscriber

first, and making everything revolve around them.

Telenor India’s top management has defined three strategic pillars that will help them

build and sustain an advantage over their competitors.

The three strategic pillars of Telenor India are:

Best on servicing the basicsBeing best on servicing the basics is about getting the things that matter for the

customer right - Best in Basic Voice and Best in Basic Internet Services. Examples are

how quickly they activate subscriptions and ensuring that customers can recharge

easily, providing products that are easy to understand, simple tariffs and advertising

messages, answering their complaints in a timely manner and resolving issues with

speed. They can also differentiate in the way telenor interact with and service their

customers. The way they respond, the way they help them to overcome the

technological and service barriers they may experience.

Best on mass market distributionThey believe that Telenor India's (and Telenor in Asia’s) strength lies in mass-market

distribution and that this should become their main capability or competitive advantage.

Their focus is on servicing retail through good systems, processes and ensuring that

they have a better trained and motivated sales force than the competition. They have a

34

sophisticated approach to the way they work in each small regional market through

mapping of retail, networks and customer usage.

Lowest costs in the industryLow cost operations mean that we focus on delivering the right customer experiences

while controlling and even reducing costs. They always seek to simplify and focus, so

they are smart in servicing their customers right with very lean operations.

Strategic ambitions for their businessIn line with Telenor global strategy to retain focus on growth and value creation, Telenor

India’s ambition is to create a strong position in mass market offering affordable

services not just for few but for many. Our three strategic ambitions for 2015-17 are:

35

(FIG 4-Strategy of Telenor)

Internet for AllTelenor aims at monetizing data as one of the main priorities in the short to medium

term. They have optimized their network to be able to offer the most affordable tariffs on

internet services like Facebook and Whatsapp. Moving away from volumes to simple

pricing based on hourly, daily, weekly and monthly packs they offer internet services in

a fair, convenient and easy to manage sachets.

Loved by CustomersTelenor believe in a staying connected with their customers and this has been the top

priority not just for their sales force but the entire leadership team in the organisation.

36

Being a mass market, low cost operations does not limit them to offer superior customer

services – they offer services at par with the industry standards.

Efficient OperationsWith an operating model based on cost of operations, Telenor has to maintain efficient

operations that are built on extreme network optimization, transformational partnerships

and superior performance management. The expert team of professionals ensure they

deploy future proof technologies that allow them to operate in a cost efficient way and

enable value creation in the communities they serve.

Their Key EnablersTo focus on their strategic ambitions, they drive two key enablers: Passionate

employees and local impact.

Passionate employees:

Telenor pride in offering a performance driven culture based on Telenor Group values,

code of conduct and leadership attitudes. Their passionate team of experts are their

true competitive advantage. As they build for future, they continue to offer digital

experience and build careers through both global and local opportunities. They pride in

being built around people.

Local Impact:

Telecom services is vital and continues to be an essential service in each of the

community they serve. they provide a telecom infrastructure that empowers both people

and nations to grow and prosper. The Local Impact ambition is about securing their

license to operate as well as creating business and societal value from connecting

everyone and driving vital services like Financial Services, Health, etc.

37

CHAPTER 4-ANALYSIS AND FINDINGS

IntroductionData analysis is considered to be important step and heart of the research in

research work. Data analysis entails that the analyst break down data into

constituent parts to obtain answers to research questions and to test hypotheses.

After collection of data with the help of relevant tools and techniques, the next

logical step, is to analyze and interpret data with a view to arriving at empirical

solution to the problem.

38

TelenorThe case deals with Telenor’s venture into the Indian telecom market and the problems

faced by it due to regulatory and judicial interferences. Telenor, a Norwegian telecom

giant lured by the growing prospects of the Indian market entered into the industry

through a joint venture with Unitech, an Indian construction company which had no

expertise in the area. Uninor, the joint venture, was very innovative in their business and

marketing strategies and became very successful, steadily building up their market

share. The company got a rude shock when the Supreme Court of India cancelled its

licenses on the pretext that the method through which the Government had allotted

them was not constitutional and not profitable. Using this as a reason the regulator of

the industry suggested that an auction with a substantially high base price would the

appropriate method to reallocate the licenses. Now, the Norwegian government owned,

Telenor is faced with a dilemma whether to shell out substantial amount of money and

participate in the auction or to cover up their losses and look else where.

Issues:

» Understand the issues and challenges faced by a new entrant into a foreign market.

» Analyze importance of analyzing the market environment and its future developments.

» Analyze and discuss the problems faced by a joint venture in a foreign market.

» Analyze and discuss different strategies that could be followed by a company facing

closure.

Introduction

In early 2012, telecom company Uninor , a joint venture between the Norway-based

Telenor Group (Telenor), a global mobile telecom giant, and Unitech Group (Unitech),

an Indian real estate company, was having problems with its investments in India.

39

Uninor’s 22 telecom licenses were part of the 122 licenses cancelled by the Supreme

Court of India (SC), the final court of appeal in the country, on the grounds that the

telecom ministry did not follow established methods like auctioning for granting of

licenses...

An attempt by Norwegian telecoms firm Telenor to cash in on a potentially huge market

for mobile phone service in India has backfired badly. Now Telenor is once again

turning to its biggest shareholder, the state, for help after getting in trouble on foreign

investments.

Telenor chief executive on stage at the launch of its venture in India, Uninor, in 2009.

Now Telenor is facing the loss of its licenses to do business in the huge country.

PHOTO: Telenor

Opposition politicians claim Telenor’s investment in India may turn out to be one of the

biggest scandals any Norwegian company has been involved in abroad. On Friday, the

company announced it was taking a stunning NOK 4.2 billion in write-downs tied to its

joint venture company Uninor, formed through its purchase of a 60 percent stake in

Indian firm Unitech Wireless four years ago.

Since then, Telenor’s effort to profit on tens of millions of new mobile phone customers

has met ongoing static. The company had a hard time securing the market share it

sought. Then, just a year after the formation of Uninor in 2009, Telenor’s Indian partner

Unitech became a target of corruption charges that came to a head last week when

India’s supreme court withdrew the licenses initially granted to Unitech that allow Uninor

to do business.

That means Telenor /Uninor may need to go through a new bidding round in order to

keep their roughly 36 million customers, at huge cost. “The situation is extremely

unclear for Telenor,” telecoms analyst Tore Tønseth told news bureau NTB.

40

Telenor officials have asked for help from the same government minister, Trond Giske,

with whom they landed in conflict just a few weeks ago over the sale of TV2. Telenor

chairman Harald Norvik reportedly has also admitted that Telenor was aware of

corruption allegations against its Indian partner back in 2008.

Prime Minister Jens Stoltenberg already wrote to his Indian counterpart last year, asking

that Telenor be treated fairly as the corruption case moved forward. Now India’s highest

court has ruled against Telenor/Uninor and a host of other companies, part of an anti-

corruption campaign that Norwegian officials would be hard-pressed to criticize.

A wide range of commentators and opposition politicians are calling on Norway’s

Labour-led government coalition to be very careful about helping Telenor when

corruption is involved. They claim Telenor must have known it was taking a huge risk

investing so heavily in India, and now must pay the price. Officials of both the

Conservative Party and the Progress Party are calling for an investigation into just what

Telenor knew about how Unitech acquired its licenses, and what Telenor has told its

biggest owner, the state in the form of Giske.

Newspaper Aftenposten reported over the weekend that both Norvik, who has long ties

to Labour, and Telenor chief executive Jon Fredrik Baksaas will likely hang on to their

jobs since the company “needs some peace” to tackle the trouble in India. Baksaas has

also survived other major problems after his expansive moves into Russia, Bangladesh

and Hungary.

What’s most important now, say analysts and government officials, is to secure Telenor

assets in India and cut losses. Giske told newspaper Dagsavisen that the Norwegian

government has great respect for the Indian court system and won’t get involved in the

legal withdrawal of the licenses “at all.” Telenor must deal with the consequences of the

court ruling. Giske noted, however, that since Telenor has invested billions in the Indian

market, the government may involve itself in the political aspects of a new licensing

round.

41

UNINORIndia,

Uttar Pradesh

Consumer complaints and reviews about UNINOR

shobha shiraswar Jul 21, 2017

Network ProblemsDear Uninor team,

I am a user of your network from last 5 years.and since last 3 days, we neither call to

anybody nor receive any call due to your network issue. I request you kindly solve this

problem ASAP.

The affected area is Solapur city, Maharashtra.

ANGARA SRINIVASA RAO Dec 27, 2016

TODAY NETWORK PROBLEMDear Telenor Team

last 6 hours netwrok fail in rudrapur location but till time not resolve the issue from your

side

so please look the issue and resolve immediately

thanks with regard

krishna nand

9045904796

pranav700 Apr 18, 2016

uninor not range42

Tower not in range

Amol S Terkar Mar 14, 2016

Network issue since last 5 daysDear uninor team,

Since last 5 day we are not able to call anybody due to your network issue. I request

you kindly solve this problem ASAP.

The effected area is lohia jain IT park Kothrud chandani chowk, paud road, Pune.

Thanks & Regards,

Amit Rane

7058431092,

Pune

network problemmy self Dhruvin shukla i found the network problem with uninor.. even i m not receiving

msgs some time.

& when someone try to make me call they heard (out of coverage) i m staying at

ahmedabad.my contact number is 8401166694.please take some action.

User658245Jan 29, 2012

network problemi am using uninor no my number is 9125081850 from kanpur up east, i am facing poor

signal quality of network kindly make more bts tower in my shastri nagar area

User638071 Dec 29, 2011

User522017 Aug 2, 2011

43

network problemsir my network problem please help me

Survey:

1)Which is your current mobile operator?(2010)

Operator’s name No. of respondants

Airtel 32

Voda 30

Idea 46

relaince 26

BSNL 25

Uninor 22

Tata docomo 19

(Table 5)

44

(FIG 5-A1)INTERPRETATION: Major respondents were using idea services.9% of respondents

use uninor.

2)If Uninor customer, how much you spend monthly on mobile?

Monthly expense No. of respondents

Below 400 18

400-700 3

700 and above 1

(Table 6)

INTERPRETATION : Here, majority of people spend below 400 and only one person

spend above 700.

45

3)Do you prefer prepaid or postpaid?

Type of connection No. of respondent

Postpaid 33

Prepaid 177

(Table 7)

(FIG 6-A3)

INTERPRETATION: 88% Of respondents prefer prepaid connection of uninor.

4)Which services of uninor are more helpful to you?

46

Services No. of respondents

Call rate 74

SMS rate 42

Network rate 48

Value added services 36

(Table 8)

(FIG 7-A4)

INTERPRETATION: here majority of respondents use call rates of uninor.

5)Do you want to shift to uninor?

Answer No. of respondents

47

yes 77

no 123

(Table 9)

(FIG 8-A5)

INTERPRETATION: 39% of the respondents wants to shift to uninor while 61%

wants to stick to their current operator.

6)Do you find uninor satisfactory?

Answer No. of repondents

yes 85

no 115

48

(Table 10)

(FIG 9-A6)INTERPRETATION: More respondents were unsatisfied with the services provided by

the uninor.

7) Was promotional strategy effective?

Answer No. of respondents

Yes 156

no 44

(Table 11)

49

(FIG 10-A7)

INTERPRETATION: Majority of the respondents felt that the promotional strategy of

uninor was effective.

8) Do you think uninor’s promotion was more than it deserved?

Answer No. of respondents

Yes 145

no 55

(Table 12)

50

(FIG 11-A8)

INTERPRETATION: 72% of the people were annoyed by the lack of quality of service

by uninor as compared to its promotion.

9)Are you aware of dynamic pricing of uninor?

Answers No. of respondents

Yes 129

no 71

(Table 13)

51

(FIG 12-A9)

INTERPRETATION: 64% Of the respondents were aware of the uninor dynamic pricing.

10)Where does Uninor lack?

Options No. of respondents

Clarity 22

Connectivity 134

Cost 3

Customer service 41

(Table 14)

52

(FIG 13-A10)

INTERPRETATION: Maximum people felt that Uninor’s connectivity and coverage was

below expectations.

53

Following are the conclusion we found after survey:

From the above analysis researchers conclude that major respondents are

dissatisfied with some of the major services of Uninor like call rates, SMS rates

and new schemes and offers.

Major respondents are youngsters and it professionals so they need more

facilities internet and low call rates, but Uninor dissatisfies this age group.

A major portion of customers are aware of Uninor service.

Uninor was a success in terms of creating awareness and spreading information.

Majority of customers are aware of Uninor that means the promotional strategy

adopted by Uninor was effective.

Uninor’s USP was its dynamic pricing.

Uninor was able to capture 9% of the market share due to its heavy promotion.

54

Trying to untangle wires

It is late evening and a flickering matchstick dimly lights up a small Ranchi shop called

Sanjay Telecom. The shop owner, Sanjay, gropes around for a candle because he's got

about five customers lined up for Uninor recharge coupons and expects many more

soon because the mobile services company offers some of the country's lowest call

rates. "They come at this time everyday and buy small recharge amounts which they

use throughout the next day," he says. "Uninor

is some Delhi-based company, not a very old

one, but sells well in my shop."

Sanjay doesn't have a clue that Uninor is

actually majority owned by Norwegian

telecom company Telenor ASA. But Telenor

Chief Executive Officer Jon Fredrik Baksaas is

probably just happy that customers are pouring

in.

Telenor CEO Jon Fredrik Baksaas

After all, it has been a rough year-and-a-half for

Telenor's Indian operations: the telecom

(FIG-14)

giant was forced to slash business down to just six circles from 13 circles after the

Supreme Court in 2012 ordered the cancellation of its permits in the 2G licensing

scandal involving several companies. In February, Uninor shut down its Mumbai

operations in line with the Supreme Court order. To add to its woes, Telenor was also

embroiled in a legal battle with its former partner, real estate firm Unitech, over

55

partnership issues.

"Having been in India for the past three years, one thing we have learnt is that we

cannot be sure of anything," says Baksaas, who was in New Delhi .

Things may finally be looking up for Telenor again in the world's second-largest mobile

market. It is the sixth largest operator in India's fiercely competitive market where 10

operators are fighting for a slice of the subscriber pie. Its six circles have enormous

business potential: they have a population of 600 million but mobile penetration is a low

40 per cent. Uninor has 32 million subscribers in India and hopes to add another 8 to 9

million this year, which is almost equal to the number of subscribers it lost after it shut

down several circles. "We have broken even in Uttar Pradesh (East) and Gujarat, and in

the coming year we will break through in the rest of the circles," says Baksaas.

Telenor's troubles and tentative recovery have been a valuable learning experience for

the company. It has gained several insights from its Indian operations which it is

exporting to other Asian markets.

For example, Uninor has implemented a unique distribution-management system, which

tracks distribution, networks and consumer usage. It is hoping to export the concept

along with its per tower profitability model which is peculiar to India: under this model,

profitability is measured on the basis of the number of each tower's subscribers.

"Baksaas and Sigve Brekke (Managing Director

of Uninor) are amazing people in that they

carried on with the business and kept pumping

in money and growing the business even though

they did not know if they would get licences after

the cancellation," says a company executive.

The telecom company has also learnt how to

56

Rs 4,018 cr Amount Telenor

paid for licences in six circles

600 mn Population of these six

circles where mobile

penetration is just 40 per cent

$900 mn Amount Telenor

hopes to save in fi ve years by

implementing new operating

models

use spectrum more efficiently to cut costs in India, where profitability is tough because

of extremely low call rates. Telenor has the lowest spectrum in India which makes it

difficult to offer high bandwidth-consuming data services.

Baksaas says the company has to strike a balance between spectrum prices and

investment conditions. It has taken a page from the country's biggest mobile operator

Airtel's book and cut costs by outsourcing its entire network management and infotech

infrastructure.

"India is a very competitive market place," says Baksaas. "We have learnt to work with

(outsourcing) partners, and have a better understanding of resource utilisation."

Analysts agree.

"Telenor's lowcost business model is well suited to the lower than average income

characteristics of these (six) circles, and Telenor calculated that its average 'cost of

production' remains 20 per cent lower than incumbents despite its lack of scale, which

should support a sustainable discounter positioning," James Britton of equity research

firm Nomura wrote in a recent research note.

But Telenor's India business could face some challenges ahead. Telecom circles were

abuzz with talk of Telenor being in negotiations with Tata Teleservices to combine their

operations in India. A Uninor executive and another at Tata Teleservices confirmed the

telecom firms were in talks, but Baksaas was non-committal.

"There is no way you can say yes or no to these things," he says. The company will also

be hamstrung by its lack of 3G and 4G spectrum or licences. Baksaas agrees the long-

term use of 2G for the Internet is not the best option, but is confident it won't hinder the

57

company's growth.

Path to profitability

58

The overcast sky fails to dampen Yogesh Malik's good spirits. Indeed, the 40-year old

chief executive of Uninor is relieved to see rain clouds after a 45-degree day. He is in

Moradabad, Uttar Pradesh, a town of 600,000 people, on a tour to see how brand

Uninor is faring in various markets. He has two stops left to make in the next two days -

Rudrapur and Haldwani. It is raining in Rudrapur, a 90-minute drive from Moradabad,

and the temperature there has dropped sharply, according to reports.

All the better for Malik to meet shopkeepers, dealers and customers. After all, this year,

Uninor expects to break even in terms of earnings before interest, tax, depreciation and

amortisation (EBITDA). In other words, it expects revenues to equal the cost of

operation. It has also advanced its target to break even on cash flow by two years. The

new target is 2013.

In a dimly lit shop in Rudrapur, a father and son, both bare-foot, are chatting. Malik

walks up and introduces himself. Mohammad Rafi, the son, owns the shop, called S.R.

Electricals, which sells Uninor SIM cards and recharge coupons. Malik asks him what

people want, and whether Uninor customers face any problems. Rafi looks hesitantly at

the Uninor field staff member who provides his store with his daily quota of coupons and

SIMs. "Don't worry, tell Sir [Malik] what your concerns are," says the Uninor staffer. Rafi

speaks up: "There is a bit of a problem with the network coverage here. If you can fix

that, Uninor will beat Idea." In Rudrapur's circle, UP (West), Uninor has a little less than

half of Idea's user base. Malik assures Rafi that the problem will be solved, as the

company is scheduled to inaugurate a new tower in the vicinity that very day.

Later, touring Andhra Pradesh, he meets Ramarao, who owns another tiny store, called

BVR Communications. Ramarao tells Malik that he gets his commissions on time,

sometimes even in advance - something no other telecom operator gives.

So why is the chief executive of a Rs 2,975-crore (in 2012) company worrying about

trifling commissions? Malik's goal is to understand what customers in different circles

59

need. He has covered 1,800 km in six days - more than the length of Norway, home of

Uninor's parent, Telenor.

(FIG-15)

This is the approach that helped Uninor break even in terms of EBITDA in three circles -

Gujarat, UP (East) and Andhra Pradesh. UP (West) looks set to be the next.

This is remarkable for a company that has, since its inception in 2009, spent a good

chunk of its time fighting legal battles and regulatory uncertainties. Uninor went to court

over partnership issues with its Indian partner, Unitech. Its pan-India licence got

quashed by the Supreme Court, and it lost about 10 million subscribers when it had to

reduce its operations from 13 circles to six. It had to let go of lucrative circles such as

Mumbai, Kolkata and West Bengal.

Today, it is not only close to breaking even, but also boasts the lowest tariffs in the

country, in keeping with its slogan, "Sabse Sasta" - the cheapest. The strategy enabled

Uninor to add more subscribers than incumbents Airtel and Vodafone in 2011. Uninor

also has the lowest operating cost - about 30 per cent lower than the incumbents.

60

Malik says Uninor's focus is on three things: mass market distribution, ultra-low cost of

operation, and delivery of basic services such as voice, SMS and basic value-added

services. It has not bought 3G and 4G licences, and does not offer post-paid services.

"If you say sabse sasta, you cannot sustain that if you are not conscious about your

cost," he adds. Low cost is the second most important reason why Uninor is close to

breaking even.Since December 2012, when Uninor's operations were reduced to six

circles, it has added 21 per cent more subscribers than Vodafone in those circles. Its

current subscriber base is 32 million, compared to Vodafone's 155 million.

"Uninor has been looking at a business transformation model… how operations and

business efficiencies can be worked upon… from IT to last-mile operations," says

Munish Seth, President and Managing Director of Alcatel-Lucent India, which manages

Uninor's network.

By the time Malik came to India in October 2010 as Uninor's chief operating officer, he

had worked in Bangladesh, Brazil, Canada, Norway, Ukraine, and the Czech Republic,

where he met his future wife, Jana. When their son Dante - named after the 13th-

century Italian poet - was born, Malik was Chief Operating Officer of Telenor in Norway

and board member of Uninor in India. Shuttling between Norway and India became

difficult, so he decided to give up his Norway role and station himself in Gurgaon, near

Delhi.

Around this time, Sigve Brekke, the Norwegian politician-turned-businessman who

saved Telenor's floundering Thailand operations, realised that the Indian operations

were in trouble, too. Tata DoCoMo had started a pay-per-second price war. Airtel and

Vodafone had become more aggressive. Telenor could not afford to lose in the world's

fastest growing mobile market, with 600 million mobile phone users in 2010.

Brekke, raised in a Norwegian farming family, was not one to give in. His inspiration was

his grandfather, who worked long hours on the farm and never took long vacations. "For

him, it was always about proving something," says Brekke.

61

(FIG-16)

When it started, Uninor had grand plans in India. But its costs were too high.

Revamping operations was harder than incubating Uninor, but Brekke was out to prove

himself. "I believe in not giving in, even if it looks really, really dark," he says. His chief

lieutenant in the battle to turn Uninor around was Malik. "Yogesh has been part of the

whole change in Uninor," Brekke says. "In the last three years, it is his as much as it is

mine."

Both Brekke and Malik were clear that they needed to do something unprecedented in

the history of Telenor and Indian telecom: work out an ultra low-cost model. This meant

negotiations with all vendors, setting up new distribution and marketing systems, new

technology, and a focus on select services.

62

Malik is obsessed with daily performance. Every morning he gets an e-mail with the

previous day's total revenue, the number of new subscribers, and gross margins.

Improving margins is a daily effort at Uninor. In the afternoon, another email message

arrives, containing a report on the cost of operations, price of service and other details.

This is possible because Malik has broken up each circle into small pieces. His team

developed what it calls the "cluster approach" - each circle is divided into five or six

zones, and each zone into six to eight clusters. This helps analyse every area minutely,

so, for example, if a retail spot has not been able to sell enough Uninor SIMs, the sales

team can precisely target it to increase sales. Only the fast-moving consumer goods

industry has this kind of intelligence, says Malik. "We had to take it from there, because

we wanted to be the best in the mass market," he adds.

Uninor's intranet portal has a performance indicator column, which shows the monthly

target for each circle and its current status. The cluster approach helped Uninor develop

new tariff plans such as 'Rocket Recharge', which lets the shopkeeper customise the

plan based on the customer's usage. The shopkeeper feeds the customer's mobile

number into a machine that automatically identifies the usage pattern and recommends

the best plan.

Rudrapur retailer Duresh Maurya, who runs a small, nameless shop since seven years,

says: "Rocket Recharge is a hit … couples are lapping it up." He says many customers

buy a SIM for themselves and one for their girlfriend.

Maurya's is a 'Uninor blue outlet', which means he gets 1.25 per cent more commission

than other outlets. The categorisation is based on cluster-level intelligence on sales, the

number of repeat customers and other criteria. Malik says that this acts as an incentive

for retailers to sell more and build brand loyalty.

The loss of circles and subscribers did not affect Uninor's break-even target. Malik

made the most of assets such as IT infrastructure, towers and the network.

63

Analysts are enthusiastic about Uninor's new model. Tore A. Tønseth, analyst at

SpareBank 1 Markets, a Norwegian securities firm, says: "Telenor also learned it had to

be best-in-class when it comes to holding its cost base down and creating an asset-light

operation."

Uninor has only 4.4 MHz spectrum, while Airtel and Vodafone have more than 6.2 MHz.

The higher the MHz, the more the traffic the network can handle. "But we are able to

carry more traffic than the incumbents, with half the number of sites," says Malik. How is

that possible?

Uninor's best network is where 80 per cent of its customers are. "Our radio engineering,

towers, algorithm and antennas are really advanced," says Malik. "I have never worked

with less spectrum anywhere than here in India." In Norway, he says, Telenor's

spectrum is over 30 MHz.

Every Uninor tower site uses 100 per cent of its capacity, compared with 70 per cent

usage among rivals. "This leads to a bit of voice clipping or disturbance," says an

executive at one of Uninor's vendors, who does not want to be named. "But that is okay

in rural areas."

Network partners Alcatel-Lucent and Ericsson, too, aim to cut costs. In an e-mail

response, Chris Houghton, head of Ericsson India, said: "There was limited spectrum

and power in these growth circles. We worked on innovative solutions that finally

ensured a double-figure percentage increase in network efficiency, powersaving

solutions and transmissionefficient features."

The IT strategy had to change. "The strategy originally was to be a much larger player

and build a big IT structure," says Anil Jain, Senior Vice President at Wipro, Uninor's IT

partner. "From a high-cost structure, they wanted to go to a simple model… very lean."

In call centres, employees were trained to resolve customers' queries right off the bat.

The IT spend fell by 40 per cent, and the number of people by a third, to 300.

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Uninor shares a portion of the cost saved, as an incentive for its partners. The cost of

operations per minute has fallen by 25 to 30 per cent, says Malik. He adds that the price

per minute is 30 per cent lower than what the incumbents offer. That's where the break-

even is coming from, he says.

Brekke says that Uninor's "cheap minutes" are becoming the benchmark for other

Telenor operations. The Norwegian company will implement the India model in

Myanmar, where it recently got a licence. The cluster approach is being adopted in

Bangladesh, Malaysia, Pakistan and Thailand. "If you can take this to other markets,

where the competition is a bit lax, then you can create a business value which is much

better," says Brekke.

It's not yet time to party. But, to Malik's delight, the Foreign Investment Promotion Board

has allowed Telenor to raise its stake from 49 to 74 per cent in Telewings

Communications, its newly formed joint venture with Lakshdeep Investments & Finance.

Uninor, which is still a Telenor-Unitech joint venture, is yet to transfer its assets and

customers to the new company which was formed in November 2012, after the Unitech

debacle.

Meanwhile, after two and half years in India, Brekke shifted base this year to Singapore,

from where he continues to oversee India operations. As for Malik, he has his sights set

for now on the road to profitability, and is focused on costs and customers.

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CHAPTER 5-RECOMMENDATIONS AND CONCLUSION

Recommendations:

Entering into any foreign market should not be based only on technical or financial strength but company should have clear long term business strategy, so that short tern hurdle could stop its way to success. Company should enter in that market segment which have few competitors but huge potential such as rural population in India. Starting in one region then expanding to other. To be successful in any country company should have services in local languages also which help illiterate and rural people to understand .Uninor should start its service in local languages of the circles in which it operates. Every Strategy Uninor pursue should be based on Indian market research as more particularly of the circle it want to successes.

The following are the suggestions given by the researchers so that uninor can serve people and its customers in an improved way:

Uninor should focus on better network because most of the customers want better network.

Uninor should provide more offers and also should launch post-paid services so that its customers increases.

Uninor should introduce new SMS schemes and night calling facilities for students and youngsters.

Uninor should introduce more schemes and facilities for the IT professionals so as to increase a potential customer base.

Uninor should decrease call rates of STD and ISD. Uninor should improve its connectivity and coverage.

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Conclusion:

In every market firm needs to opt either strategy cost reduction or differentiation. In

India Uninor has executed differentiation in its product offering and marketing strategy

to fulfill the dissimilar demand of the customers occurring due to difference in consumer

tastes, distribution channels, competitive conditions and business practices. Hilly and

mountainous region of India have very low density so Uninor can tap that market,

Uninor should also try to cater Small and medium size businessman, this category is not

very literate prefer local language instead of English.

In U.P (East) circle Uninor’s market share is (4.3%)

Major respondents are youngsters and it professionals so they need more

facilities internet and low call rates, but Uninor dissatisfies this age group.

A major portion of customers are aware of Uninor service.

Uninor was a success in terms of creating awareness and spreading information.

Majority of customers are aware of Uninor that means the promotional strategy

adopted by Uninor was effective.

Uninor’s USP was its dynamic pricing.

Uninor was able to capture 9% of the market share due to its heavy promotion.

Customers avoided uninor due to lack of connectivity and coverage.

Uninor should improve its GPRS and other VAS features.

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APPENDICES:BIBLIOGRAPHY

AppendixAn appendix is used for additional or supplementary materials, which has not found

place in the main text. The materials that can be included here are original interview

schedules/questionnaire, copies of covering letters used, documents and long

explanatory notes to the text, statistical tests used and tables referred and any other

material of considerable reference value.

Bibliography

The books, journals, reports and other sources of secondary data according to

alphabetical order of last name (surname) of the author are to be listed in the format

given below:

World Investment Report (2008) Transnational Corporations and the

Infrastructure

Challenge, India briefing homepage cited http://www.indiabriefing.

com/category/business/economy-politics- 23/10/08

Aiyar, S. A. (2001); ‘What makes MNC quit India’. The Times of India,

November 4, 2001.

Bajpai, N. and Sachs, J. D. (1997); ‘India’s Economic Reforms - Some

Lessons from East Asia’. Journal of International Trade and Economic

Development.

Bajpai, N. and Sachs, J. D. (2000); ‘Foreign Direct Investment in India: Issues

and

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Problems’, Discussion Paper No. 759 of Harvard Institute for International

Development

of Harvard University.

Bartholomew, M. F. (1997); Successful Business Strategies using

Telecommunications.

Artech House Publishers.

13. Johanson J. and Vahlne J. E. (1977); ‘The Internationalization Process of the

Firm - A

Model of Knowledge Development and Increasing Foreign Commitments’.

Journal of

International Business Studies, Vol. 8, August, pp. 23-32.

14. Johnson, G. and Scholes, K. (5th edition)(1999); Exploring Corporate

Strategy. Prentice

Hall Europe.

15. Miller, A. (3rd Edition) (1998); Strategic Management. Irwin McGraw Hill.

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REFERENCES

1. http://economictimes.indiatimes.com/news/news-by-industry/telecom/Telenor-

investorssay-Quit-India-as-ventures-losses-pile-up/articleshow/6507100.cms

2. http://www.telenor.com/en/news-and-media/press-releases/2010/uninor-launched-in-

fivenew-circles-in-india

3. http://www.scribd.com/doc/32045859/uninor-gr5

4. http://economictimes.indiatimes.com/news/news-by-industry/telecom/Telenor-

investorssay-Quit-India-as-ventures-losses-pile-up/articleshow/6507100.cms

5. http://www.scribd.com/doc/32045859/uninor-gr5

6. http://www.dot.gov.in/osp/Brochure/Brochure.htm#status

7.file:///I:/Telenor%20India%20-%20History%20Milestone.htm

8. file:///I:/Telenor%20India%20-%20History%20Milestone.htm

9.http.dlscrib.com

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