Tikona to shut down operations in 13 cities

MUMBAI: Broadband service provider Tikona Digital Networks has shut operations in 13 of 38 cities as part of, what it calls, efforts to consolidate coverage.

"We have chosen to consolidate and expand our coverage and capacity in the top six metros and 19 Tier-I cities, making us the leading broadband operator in the top 25 markets of the country in respect of coverage, capacity and share of new additions," Tikona said in response to an email query.

Two investment bankers close to the development said the move is a precursor to possible stake sale in the Mumbai-based company. The bankers, who spoke on condition of anonymity, did not assign a valuation for the company.

But Tikona denied any plan to sell stake, saying there is "no such event in the current horizon". The company said, "On the contrary, you may have read that Tikona has successfully closed yet another round of equity raise from the current investors very recently."

Investment bank Goldman Sachs, venture capital firm Oak Investment Partners and private equity firm Everstone Capital Advisors together hold 70 per cent stake in the company. Earlier this month, there were reports that Tikona was looking to raise up to Rs 1,000 crore to launch fourth generation, or 4G, mobile service for data.

The company had won wireless broadband spectrum in five service areas in a government auction in 2010 for Rs 1,058 crore. It is expected to launch services in these areas only towards the end of 2013.

"Our Wi-Fi broadband network covers the top 25 cities of India, most of which are outside these five 4G circles," the company statement said, adding that when it offers 4G, it will simultaneously offer Wi-Fi services that are broadcast on free-to-air spectrum but have a shorter serviceable range.

One of the bankers quoted earlier said the company has uprooted its entire network from the cities it has exited, so that it can re-use the equipment elsewhere.

Another person familiar with developments at Tikona said the company had recently affected some salary cuts as well. The company, however, denied this.

"Our consolidation strategy has had a significant impact on our Ebitda (earnings before interest, tax, depreciation and amortisation), which has improved by 100 per cent in the last one year. We are on the path of achieving breakeven within first four years of commercial operations," the company statement said.

Tikona said it remains steadfast in its belief in India's data revolution and strong demand for broadband services.

"The ARPU levels of broadband continue to rise in contrast to constantly falling ARPUs in voice. The supply side (for data) is far less crowded than in voice, thereby giving the early movers like Tikona an advantage to make inroads in the data markets," it said. 

Source:TOI