Tikona Digital Networks, a pure-play internet service provider that offers wireless broadband services to home and enterprise customers, is vying for a place in the highly competitive Indian broadband market. The company, which began commercial operations in 2009-10, has deployed unique small cell architecture to roll out internet services across 25 cities. In just five years, it has achieved break even in terms of earnings before interest, taxes, depreciation and amortisation owing to a high ARPU (Rs 630 per month as of November 2014) as well as the constantly increasing rate of average monthly download per subscriber. The latter increased from 6 GB in 2012 to 21 GB in 2014.

Key offerings

Tikona is leveraging 50 MHz of its un-licensed Wi-Fi spectrum to deliver wireless broadband internet services. It has installed 12,000 IP nodes, each of which can support a capacity upwards of Digital Signal 3. It has also leveraged the fibre capacities of more than a dozen utilities and operators to serve as a backbone for carrying the large traffic generated on its network. At present, the home broadband business accounts for more than 70 per cent of Tikona’s revenues, while the balance comes from the enterprise segment.

The company moved into the enterprise segment in 2012 by acquiring HCL Infinet, the enterprise service division of HCL Infosystems, and renamed it Tikona Infinet. Its focus was on providing a secure broadband network for enterprises. Tikona Infinet currently offers a range of pan-Indian network solutions like virtual private networks, managed network services, and internet leased lines to more than 5,500 key corporate customers. During 2014, it further expanded its enterprise offerings by rolling out high speed large GB bundled plans, called value internet leased line or VILL, which it says will help enterprises dramatically cut costs.

4G entry

While broadband in India has historically been associated with fixed technology, there has been a rise in 3G- and 4G-based network roll-outs over the past three to four years. Recognising the wireless trend, Tikona had invested very early in the technology. In 2010, it acquired 4G spectrum in five circles – Uttar Pradesh (East), Uttar Pradesh (West), Gujarat, Rajasthan and Himachal Pradesh – to deploy a long term evolution (LTE) network and offer capacity and coverage for broadband services. These circles constitute 28 per cent of India’s population and some of the most starved broadband markets. However, Tikona commercially launched 4G services only this year as it had earlier felt that the country’s 4G ecosystem needed to develop further.

According to Prakash Bajpai, founder and chief executive officer, Tikona Digital Networks, “It is only now, in 2015, when the device ecosystem has developed that a large-scale roll-out is warranted. We launched 4G home broadband services in Varanasi in August 2015. We expect to complete its launch in all major towns in the five circles where we hold broadband wireless access spectrum during 2016.”

While Tikona has not faced any significant challenges in the initial phase of rolling out 4G, it could come up against a few later on. “We foresee that as traffic grows, the challenge that is likely to emerge is the availability of fibre capacity with large telecom companies for carrying traffic from 4G base stations to city hubs. Tikona will mitigate this challenge by aggregating fibre capacities available with utility companies in addition to sourcing capacities from large telecom companies,” says Bajpai.

Fresh funding

During 2014, the company secured $45 million in funding from the International Finance Corporation and other investors like Goldman Sachs Asset Management, Oak Investment Partners, Everstone Capital, and L&T Infrastructure Finance. These funds will be used to expand the existing unlicensed band network in the top 15 cities and achieve a greater market share. In fact, Tikona has already been able to increase its gross additions to 18,000 subscribers per month using the above funds.

Plans and targets

While the biggest challenge for Tikona will be surviving the fierce competition in the market, it has a strategy for tiding over tough times. “India is at the cusp of a data revolution,” says Bajpai. “The challenge is to build a new data-centric network architecture that can provide for much larger capacity at affordable costs. Tikona is poised to make a major contribution by investing in spectrum-efficient 4G LTE and Wi-Fi networks and supporting high capacity home and enterprise broadband services.”

It is planning to increase service availability in the top 15 cities by expanding its unlicensed band network. It will also launch 4G broadband services in the top 40 cities in the Gujarat, Rajasthan, Uttar Pradesh (East), Uttar Pradesh (West) and Himachal Pradesh circles by 2016. In the long term, Tikona intends to expand its coverage to about 1,200 towns in the five circles where it holds broadband wireless access spectrum for offering 4G broadband services. With the home broadband-focused business model, along with its presence in the enterprise segment, the company is financially and technically well placed to maximise its revenues and profitability.