Indian telecommunications firm Tikona Digital gets US$171 million loan from US govt agency

Wed Jan 18, 2017 - 4:30am UTC

Indian telecommunications firm Tikona Digital gets US$171 million loan from US govt agency

Telecommunications firm Tikona Digital has recently received a funding of US$171 million in the form of a commercial loan from Overseas Private Investment Corporation, an independent US government development finance agency, according to a report in The Economic Times.

The loan comes as a chance for Tikona Digital, providing the firm with the required liquidity for revival while putting talks of M&A with Telenor to rest.

There were reportedly talks of Tikona’s merger with Norway’s Telenor and leading Indian telecom player Airtel because of the 4G airwaves that it had bought in 2010. However, valuations have been an issue, according to a statement by an investment banker.

“This could be the company’s second coming with renewed interest in the telecom sector and its ancillaries,” The Economic Times quoted a senior investment banker who wanted to remain anonymous.

In October 2015, Tikona Digital Networks, engaged in building the next generation wireless broadband services for home and enterprise customers in India, has announced that it would launch 4G broadband plans in 30 cities by the first half of 2016.

The telecommunications firm currently runs a pilot project in Varanasi to wire the city with 4G technology for home broadband. The company has 20 MHz of broadband spectrum in 5 telecom circles including Gujarat, UP=East, UP-West, Rajasthan, and Himachal Pradesh, for which it had paid Rs 1,058 crore during the 2010 Broadband Wireless Auctions.

Prakash Bajpai, a technocrat, started Tikona’s home WiFi service on free airwaves, but business did not shape up as earlier forecast. In 2012, Tikona consolidated resources shutting service in 12 out of the 38 cities and has now developed technology to provide broadband with 4G technology.

After its latest technology investments, Bajpai said the company can now produce 1GB of data for a mere Rs 5. It is looking to replicate this process in Varanasi in at least 60 more cities within the next 18 months.

“Mobile telecom operators produce a GB of data at about Rs 60 to 70,” said a senior telecom analyst. However, the cost structure for mobile operators and home broadband operators will always be disparate because maintaining mobile continuity is costly.

However, the company is not trying to complete with wireless operators, but instead challenges only BSNI, Tata Teleservices, and other local broadband operators such as Hathaway.

In Varanasi, Bajpai said the company has been able to take on competition and gained around half the market. It is not offering low-end solutions and instead wants to corner the multi-device, heavy users who consume tens of GB data. Bajpai also said the move has resulted in a seven-month break even for Varanasi.

“Varanasi is the first city where 4G services has been launched and plans are to launch 4G network in other cities and circles soon. We are hopeful that subscribers in Varanasi will get to experience world class home broadband services which they can use conveniently for various reasons,” said Prakash Bajpai, the Founder, MD and CEO of Tikona Digital Networks.

The company had earlier secured US$45 million in November 2014 from International Finance Corporation, Goldman Sachs, Oak Investment Partners, Everstone Capital Advisors and L&t Infrastructure Co Ltd.

Tikona plans to use the fresh funds for rolling out the 4G-based broadband services across the country.

By Vivian Foo, Unicorn Media

This news is published on Reuters.