Tikona Digital Network, the home grown broadband service that has a network spread across 25 cities, has come of age and would like to focus on brand building. Founded in 2008, it was almost for the next 18 months into the construction phase, followed by the perfection phase. Today, Tikona, has rolled about 40,000 outdoor WiFi base stations which cover 60-70 per cent of its market. Heramb Ranade, CMO, Tikona Digital Network, tells Pitch that it is time now to move to the brand building stage. Excerpts from the interview:
According to recent reports, telecom operators like Airtel and Idea are planning to come up with more than a lakh WiFi hotspots in the coming year in association with local players such as Tikona. Why should a telecom player tie-up with a digital player like Tikona, when they have their own GPRS and 3G services?
All the smartphones or portable devices have WiFi as the fundamental interface these days. It is a standard interface and 80 per cent that you do on your desktop you can do on the smartphone or tablet through WiFi. There are two drivers, one is when you are in a limited area a mall or a restaurant or a hospital or a club house or office, these are location where you can experience a far superior speed than what you can do on your 3G at a far more economical cost line. Almost five times speed in one fifth or one tenth the cost, that is the value proposition that you get on WiFi. Your device does not have to have 3G, which requires a SIM on every device; but in WiFi you just need the passkey.
What is the growth on demand for Tikona YoY?
On demand side we have seen a growth of 25-30 per cent in this sector, which we are expecting to multiply. Earlier, the growth was directly co-related with the number of PCs in the house. But now with the advent of new devices on the scene such as tablets or smartphones, which are costing about Rs 7,000-8,000 or even Rs 5,000, the expectation is that it will penetrate a larger number of consumer base.
Where do you think you are doing the best out of the 25 cities?
In terms of numbers we are doing good in Mumbai, Delhi, Bangalore, Pune, Indore, Surat which are our best markets, but even the other markets although the absolute number is small, compared to the demand we are doing an equally good job.
What is your network strategy?
We cater to home segments, we cater to SMBs and we cater to enterprises. What we have done in the process of creating a network is to create a near blanket coverage of the cities we operate in. We have our own back bone and I can create a hotspot at any point in the city without having to create infrastructure.
What are you doing for the promotion of Tikona in the 25 cities?
Every project goes through phases. We had three phases – the construction phase, the perfecting phase and the brand creation or the service creation phase. We have just completed our perfection phase. We perfected a lot of processes, systems, hardware and technology and now we are ready to roll the next step. Besides the mainstream media, we are banking largely on the digital medium, because for us 100 per cent of our target audience is digital and on the internet. There are so many options in the digital space including the social media that one can leverage today.
In the mainstream are you focused more on ATL or BTL?
ATL for us is not sustained and we do it on and off. But BTL is what we do day in and day out. We have 1,000 feet on street that operate on a daily basis and reach out proactively to consumers. The way we have architected BTL is that we invite the customers to see the demo right in the premises of their homes on their PCs. Nobody has the potential to do if you are a wire-line player. All that I have to do is carry a wireless device, hang it in the balcony or rooftop, string a cable and show the demo. If you like it, you can subscribe for it online and you are done with the installation. We call it ‘first demo, then pay’.
How does Tikona position itself in the market?
Our positioning is visible in all our communication; we call it the 4S positioning. If you ask the consumer what is that the consumer cares about, it’s speed, savings, security and service. We give customised plans for proper speeds and hence save on money, we have bundled security packages with the connection and we provide remote assistance as a part of our service where 60 out of 100 queries and problems are solved over the phone.
What are the kinds of investments you have made to develop and come up with the system you have today?
At the network layer, the investments comprises of creating 40,000 micro base stations outdoors. These are very low powered (10W) environment friendly stations that need no air conditioning, as compared to 2-3 KW that a mobile spot takes. These connect to our fibre notes where the capacity sits, this is where the big pipes are and where all 700 converge. Then there are 10,000 IP nodes where our information is kept. This is where we have invested in terms of infrastructure.
We have multiple businesses right now. One is the wireless broadband that we run in the cities, we run the 4G or the LT licence in the circle, a large part of our investment has gone into acquiring 4G licenses, and last year in November, we acquired HCL Infinet, which is a subsidiary inside HCL Infosystems, which caters to the large corporates, marquee accounts like national stock exchange. That is now a wholly owned enterprise of Tikona. Hence, our investment has passed this way and the largest was to acquire the 4G services.
What is your ROI like? And what is the competition is the market now and what is your market share?
The target ROI is like what any equity investor would expect, in the 20 per cent range. All the wire-line players, whether be MTNL, BSNL, Airtel, Tata, Reliance etc, are all our competitors. These players have been in the market for the last 12 years, so the cumulative market share would be insignificant, but we have been acquiring anywhere near 20-30 percent market share in the markets we operate in from the share of net access.
Would you call your services economical?
The way we look at is that we think every consumer has a certain budget in his mind, some households say they want to spend Rs 400-500 some say they want high speeds and they will pay Rs 2000-3000, eventually it is to create the right products for the right segment. We have custom plans for different segments.
Is catering to three different verticals SMBs, Homes and Enterprises, be called your segmentation strategy?
We call it micro segmentation strategy as even in the home segment, we are catering to a sub category. So it is the overarching segments that are three and there are smaller segments. For example, in enterprise we have a segment that does not always work 24×7, so we give them a lease line that operates for only the time of the official work that they have subscribed to. So in peak hours it will work as a lease line and off peak hours it will work as a high quality home connection.
What are your future plans?
The next big thing will be the LT as the eco system develops and comes into the devices and global systems come in to play in India. This will happen in 2013 and 2014 and has already started in India. Next two years will be LT rollout for us and the other thing is jump starting HCL Infinet that we have acquired.
What is your annual turnover?
We will be a little over Rs 200 crore across all the segments. This excludes LT, which we have not rolled out since it will be much more than what we are now.