‘Indian IT cos can build systems at lower cost points’

As Jon Fredrik Baksaas, president and chief executive of Swedish phone firm Telenor prepares to launch Uninor ��� a joint venture with Unitech, he said India offers ���the fastest path to profitability��� when compared with Telenor���s other greenfield phone projects. Uninor plans to have around 8% of the Indian mobile phone market and also achieve profitability within three years of operations. Excerpts from an exclusive interview with ET. (Watch)

How does your profitability target for Indian business compare with other greenfield projects Telenor executed in other European and Asian markets?

When we made this decision about entering India, the economy was in a slump, and the decision was made to create growth for us. We know it takes time to build a profitable position. We are looking at break-even (EBITDA) in three years of our operation. We also expect to achieve cash flow break-even within five years of operation.

With outsourcing, India offers a completely different cost structure, compared to any other market. The path to profitability is really fast, because tower sharing allows you to have a very low capex-based model. For instance, we took nine years to become profitable in Norway, and seven years to achieve break-even
in Hungary.

How does India compare in terms of ���time-to-market��� with other greenfield projects?

April last year is when we decided to enter India, and with plans of launching our operations before Christmas, we are talking of six to eight months of working time.

This is our most speediest launch ever, any where in the world. It was made possible by concept of tower sharing, among other benefits of outsourcing. If we were to establish our own network, we could have taken around a year to launch. What also made it possible was the available pool of professionals with relevant experience.

What role has IT played in helping you achieve cost and launch targets?

Indian IT companies have a very powerful formula for building systems and solutions at lower cost points. We work with Wipro for our broad IT needs and have also identified three firms for outsourcing of customer service function.

What kind of market share do you plan to achieve?

We are in the middle of a very fast build up when it comes to the Indian mobile subscriber growth. As we speak, 10 million subscribers are being added every month, and that will continue for another 2-3 years. Our long-term target is to have around 8% share of the market.