‘Telecom is definitely not for small players’

When Prakash Bajpai, a veteran telecom executive, bought spectrum in 2010, it took everyone by surprise. Bajpai, who had earlier worked in a number of tech and telecom companies, was known to be a man who took calculated risks. But venturing into the telecom space dominated by big boys like Airtel and Reliance was beyond anyone’s imagination. Seven years later, after trying to raise funds on his own and looking for strategic investors, Bajpai has sold the spectrum to Airtel. BusinessLine spoke to him to understand what took him so long to find an exit and what he plans to do next with Tikona, a company he founded to offer broadband services.

Cloud you mention the brief contours of the deal? How much of the debt did Airtel take over?

The deal is for our 4G business, and is pegged at about ₹1,550 crore; with the spectrum transaction costs, it comes to roughly ₹1,600 crore. The entire debt has been cleaned up, and now we will have surplus cash for business.

You had been looking to sell the spectrum for quite sometime. Why did it take so long?

It took nearly five years for the 4G industry to mature, and for the infrastructure and the technology to become commercially available. That’s when all the operators who got the spectrum put it to use, and now 4G has become the mainstay in the market. The spectrum we had acquired was valuable, and is used for high-capacity data. In fact, winners in the industry are differentiated by who has spectrum and who doesn’t.

The spectrum also requires a lot of capital inclusion to derive its full value. But at the same time, being a small company, we thought it is wise to collaborate with somebody who can unlock the value of the spectrum.

In 2010, many small players had acquired spectrum. All have exited. Is there a realisation that telecom is not a sector for smaller players?

The mobile telecom industry is definitely not for the small players. It is a capital-intensive sector with long-term returns. At the same time, there are important spheres which are not in the zone of the mobile industry, but within the focus of companies such as Tikona.

With hardly any broadband connectivity, I think there is large hope for us. Limited to the capital and resources available to us, we will continue to grow well. The spectrum will be put to good use in the hands of an operator such as Airtel.

Did you miscalculate this when you acquired the spectrum, as it only added to your debt?

We did not buy the spectrum on the strength of debt alone, but also by looking at the strength of equity and debt deployed at that time. It took a very long time for the ecosystem to mature. At the end of the day, we feel very good that we realised the value for the spectrum.

What next?

We are now in an excellent position, with growth capital and no debt burden. We will grow our fixed broadband business fast as we believe there is an unattended opportunity for delivering home broadband business through a wireless model. We have roughly 3.5 lakh customers, besides our enterprise customers, and that business is well poised to grow.

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