Tikona Digital Networks: Consolidating its business to retain a competitive edge

Company Stories , August 21, 2013

Tikona Digital Networks won broadband wireless access (BWA) licences for five circles in 2010. The company was awarded 20 MHz of spectrum in the 2.3 GHz band for Rs 10.58 billion for the Gujarat, Himachal Pradesh, Rajasthan, Uttar Pradesh (East) and Uttar Pradesh (West) circles. In October 2012, Tikona, an internet service provider (ISP), had planned to roll out long term evolution (LTE)-based BWA services across these circles. However, it faced a setback owing to the under-developed ecosystem for 4G services in the country. The company has now adopted a wait-and-watch approach to learn from the experience of BWA licensees like Bharti Airtel and Reliance Jio Infocomm.

Founded in 2008, Tikona is led by industry veteran Prakash Bajpai, who established the company with his former colleagues Tarun Kumar and Heramb Ranade to build a telecom network for mobile, enterprise, broadband and direct-to-home services. Tikona is backed by investment bank Goldman Sachs, venture capital firm Oak Investment Partners and private equity firm Everstone Capital Advisors.

At present, the company operates in 25 cities and has been offering wireless broadband services using unlicensed spectrum. It uses 60 MHz of bandwidth in the 2.4 GHz band and 50 MHz of bandwidth in the 5.8 GHz band for backhaul connectivity. Tikona’s broadband services are powered by orthogonal frequency division multiplexing and multiple-input, multiple-output technologies. The company is offering broadband services with speeds of up to 2 Mbps.

Tikona is also providing various internet-based services to offices under its direct-to-office offerings as well as home wireless solutions to residential users. The company’s service portfolio includes secure, enterprise-grade office Wi-Fi solutions; and load balancing solutions across multiple diverse links. Further, recognising the increasing use of internet technologies and IT-based applications by enterprises, Tikona has been targeting the enterprise segment with innovative products and solutions.

In 2012, Tikona acquired HCL Infinet, the enterprise data services arm of IT firm HCL Infosystems, to strengthen its position as a strong Wi-Fi solution provider for the enterprise segment. The company, renamed Tikona Digital Infinet, has a presence in over 6,000 locations through a combination of fibre-based and licensed band microwave networks. Tikona Digital Infinet serves companies like SpiceJet, Mahindra Finance, LG, Videocon, Pepsi, Apollo Tyres, Hero Honda and the Aditya Birla Group.

As part of a consolidation exercise undertaken in December 2012, Tikona shut down operations in 13 of the 38 cities it was operational in. The company plans to consolidate and expand its operations in the top six metros and 19 Tier I cities. By limiting its presence and concentrating its resources in key markets, the ISP is looking to become a key broadband service provider in the top 25 cities of the country in terms of coverage, capacity and subscribers. The company’s expansion plans have received a boost with the Foreign Investment Promotion Board recently approving its proposal to raise funds through equity.

With the required investments in place, Tikona is looking to roll out 4G services in the Gujarat circle in late 2013. The company’s 4G network will target mobile users, while its Wi-Fi and broadband services will cater to fixed line customers. It plans to introduce 4G in cities by rolling out a carpet network using the micro cell technology. The company has already set up 40,000 micro cells for its broadband services and will use them to provide 4G services.

To make an impact in the 4G market, Tikona plans to offer these services to users at a lower price as compared to incumbent players like Bharti Airtel. However, a key competitor for the company will be Reliance Jio Infocomm, which is planning to enter the 4G market in end-2013 and is likely to introduce very low tariffs.

Going forward, industry experts believe that despite competition, the company has the potential to attract customers in circles where it holds BWA licences, as these markets are characterised by low broadband penetration. Moreover, Tikona has the opportunity to make inroads into the data market given its lower operating costs owing to the use of unlicensed spectrum.


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