Telenor in India: Underdog's Innovative Pricing Strategy

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Introduction

late 2009, a new entrant into the Indian telecom market - Uninor, a collaboration between India-based Unitech Wireless1 and Norwegian telecom giant Telenor Group2 - announced a dynamic pricing model under the name 24X7 Badalta Discount Plan through which customers could avail of 5% to 60% discounts 24 hours a day. With this dynamic pricing plan, the company intended to create a new trend in the Indian mobile industry, in which price wars were intensifying and the Average Revenue Per User (ARPU) were continuing to fall.

Uninor had high expectations of the strategy and felt that the plan would help it to quickly attract many subscribers. However, considering that the company was new and would have to commit high capital for its operations and that it would be competing with established rivals, industry observers wondered whether it could sustain the innovative plan for long enough to break even.

Indian Telecom Market: Going Wireless

Telegraph lines connecting several states were established in India in 1851. In 1882, the central telephone exchange was opened, with 93 subscribers. However, the telephone did not gain prominence until much later and post remained the preferred choice. Even after independence, in 1947, the growth of the telecom sector was slow as lack of infrastructure and high tariffs restricted accessibility to it to a minor proportion of the populace...

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1] Unitech Wireless was a company floated by Unitech, a realty major in India, and it procured a telecom operator licence from the government.
2] Telenor is a leading global telecommunications company based in Norway. As in June 2010, it had more than 184 million subscribers, making it the world’s 6th largest mobile operator.