Telenor Introduces Mobile Services in India

Norwegian telecom operator, Telenor, rolled out Thursday mobile services in the very competitive Indian mobile market, starting with seven telecom circles, or service areas.

Unitech Wireless, the company's Indian joint venture, holds licenses to operate services in 22 circles in India, and enters a market in which there are already 11 players. It is offering the service under the brand name Uninor.

In October Telenor said the Indian government cleared it to increase its stake in venture, which it operates with a real estate company, to 67.25 percent from 49 percent.

The Indian mobile market continues to boom. In October the country added 16.7 million mobile subscribers, taking the total number to 488.4 million, according to Telecom Regulatory Authority of India (TRAI). About 42 in 100 Indians are now mobile subscribers, TRAI said.

A lot of the gains in the mobile market are likely to have come from a tariff war that has pushed down voice tariffs to as low as 0.01 Indian rupees (US$0.0002) per second. Earlier tariffs were typically fixed for a minimum of one minute or multiples thereof.

Some of the new entrants like Telenor see a large market opportunity in the millions of Indians without mobile phones. Telenor is targeting in the long term an 8 percent share of the Indian market.

The Indian joint venture of Etisalat also plans to roll out services in India.

Some analysts are however skeptical that the new entrants can make an impact. The Indian market is saturated in terms of operators, and new entrants will not have a significant impact on the share of the established players, said Kamlesh Bhatia, a principal research analyst at Gartner.

The new operators will have to come up with a disruptive business plan either around price or new value-added services, to get attention, Bhatia said. With voice tariffs hitting rock bottom, new entrants will have to look at attractively priced bundles of voice and other services such as data, he added.

Value-added services is another opportunity, but that market may not take off in India until the country has 3G services, Bhatia said. The value-added services business currently consists primarily of ringback tones and SMS (short message service), he added. The auction of spectrum for 3G services is scheduled tentatively for January.

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