Friday, July 24, 2015

Growing Investments in Broadband Companies

Prime Minister, Narendra Modi initiated his ambitious project ‘Digital India’ recently. With this program, he wants to benefit the people by providing digital services and facilities across the country. Since the announcement of the program, many Venture Capital (VC) and Private Equity (PE) firms have shown interest in investing in broadband companies.
Growth of broadband
Broadband facilities have become an integral part of our daily lives. The internet makes daily tasks at home and office simpler. In this information age, everybody wants access to the internet. More and more consumers are on the lookout for quick and dependable internet connections.
Due to growing demands, broadband companies are also expanding their businesses. They are capturing the untapped markets in various corners of the country. They receive an encouraging response from all over. Broadband companies are witnessing rise in their subscribers and revenue.
Most VC and PE firms believe that the number of broadband users will increase dramatically in few years. Seeing the opportunities and potential, these firms are getting keener to invest in broadband companies. The penetration in e-commerce and on-video demand will become prominently higher.
Investments in Tikona
Like many other investment companies, the investment arm of World Bank, International Finance Corporation (IFC), has also announced its investment plans. It has led a round to invest $45 million in Tikona Digital Networks Pvt. Ltd.
Out of the total investments, $25 million will be made by IFC. The remaining amount will be contributed by Goldman Sachs Asset Management, Everstone Capital, Oak Investment partners and L&T Infrastructure Finance Co. Ltd. The funds will be used to extend the company’s existing broadband services in India. It will extend facilities to middle-class families and small entrepreneurs in Madhya Pradesh, Uttar Pradesh, Chhattisgarh and Rajasthan.

The government permitted the organization to obtain Rs.250 crores with an equity sale, in September, last year. The foreign equity participation of the company was increased by 1.18% from the previous 72.58%.

IFC has a wide knowledge of the broadband sector and good experience in business investments. Some current investors are also contributing additional funds to the broadband company, showing faith in its business.

Tikona provides broadband services in 25 cities of the country. It is looking to set up infrastructure to offer video, voice, multimedia content services and information technology (IT) applications to other broadband networks. The company is also preparing itself to roll out Fourth Generation (4G) services.