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Tikona Digital Networks: Betting big on Wi-Fi and LTE

June 19, 2012
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Since the broadband market in India is yet to replicate the success achieved by the mobile voice segment, it offers huge potential for players like Tikona Digital Networks. Further, what differentiates Tikona Digital from its peers in the broadband industry are its innovative service offerings.

Since its inception in 2008, Tikona Digital Networks India Private Limited has been focusing on developing wireless alternatives to fixed broadband. The company provides wireless broadband services to home- and office-based users through fixed antennas connected to the nearest base station. Thus, it does not face the challenge of varying signal strengths or handing-off coverage from cell to cell. Moreover, given the inadequate spectrum availability to cater to the growing data demand, Tikona has been using Wi-Fi technology to deliver broadband services to over 220,000 homes as well as 10,000 small and medium businesses across 39 cities. The Wi-Fi band is a part of the unlicensed spectrum and can be used to deliver wireline equivalent broadband services. Currently, the company uses 60 MHz of bandwidth in the 2.4 GHz band to operate between base stations and customers. Another 50 MHz in the 5.8 GHz band is used for backhaul, which connects to an extensive fibre backbone passing through all the neighbourhoods in the coverage area.

The company has now started focusing on outdoor Wi-Fi offerings, where microcell architecture is deployed to create a Wi-Fi cloud, which can send signals to homes and offices. Ruckus Wireless and other vendors including Cisco, HP and Alvarion are assisting Tikona Digital in this project.

 Service portfolio

The typical offerings by the internet service provider include load balancing solutions across multiple diverse links, secure enterprise-grade office Wi-Fi solutions and solutions that aim at improving internet uptime in offices.

Today, residential consumers use Wi-Fi services on their wireless devices for internet connectivity. Tikona offers all-home wireless solutions that help connect these devices without making any physical alteration to the customer premises.

Further, in a bid to leverage the growing enterprise segment, Tikona Digital acquired HCL Infinet, the enterprise data services arm of IT company HCL Infosystems, in February 2012. With this acquisition, it can now cater to the lucrative enterprise segment along with the home segment. The new entity has been renamed Tikona Digital Infinet and currently serves more than 6,000 business locations of large enterprises through a combination of fibre and licensed band microwave.

The 4G opportunity

During the broadband wireless access (BWA) spectrum auctions conducted in 2010, Tikona Digital won 20 MHz spectrum in the 2.3 GHz band in five circles for Rs 10.58 billion. These are the service areas of Gujarat, Himachal Pradesh, Rajasthan, and Uttar Pradesh East and Uttar Pradesh West. The company plans to roll out long term evolution (LTE)-based 4G services in October 2012 across all these circles. During the initial launch, Tikona Digital will focus on Tier 2 and Tier 3 cities, with high and untapped market potential. Besides Himachal Pradesh, the company currently offers its Wi-Fi services in all the other circles through the Wi-Max spectrum. Also, it believes that the densely populated Uttar Pradesh East and Uttar Pradesh West circles, characterised by low internet penetration, have the highest potential for the uptake of these services.

As far as the competition in the 4G space is concerned, Reliance Infotel is likely to pose a serious challenge for Tikona as it was the only player to acquire  pan-Indian BWA spectrum. As for Bharti Airtel, while it won spectrum in only a few circles, the recent launch of 4G services in Kolkata and Bengaluru has given it an edge over its rivals.

That said, Tikona Digital is optimistic about its 4G service uptake and has earmarked investments of over Rs 10 billion for the next two years. It plans to combine LTE and Wi-Fi technologies to offer seamless data connectivity to its customers. Users will be able to avail of broadband services indoors (in homes and offices) through existing Wi-Fi networks and outdoors through LTE.

Going forward

Tikona Digital is continuously expanding its Wi-Fi network and is aiming to reach out to over 350,000 residential customers by end-2012.

Further, it plans to extend connectivity to all the major cities; however, funding remains a serious area of concern.

The private equity-backed player needs funds to maintain its base stations and other customer equipment. Recently, it has been reported that Malaysia-based telecom operator Axiata has withdrawn its plans to acquire a substantial stake in Tikona Digital, primarily due to differences over valuation. The promoters of Tikona Digital had valued the company at Rs 49 billion, which according to Axiata was high in light of the uncertainty in the Indian telecom sector post the cancellation of 2G licences by the Supreme Court.

However, given the untapped broadband potential in India, the future looks promising for Tikona Digital.

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