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Qualcomm seeks Indian buyer for 26% stake in subsidiary

Qualcomm seeks Indian buyer for 26% stake in subsidiary
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First Published: Wed, Jun 16 2010. 10 07 PM IST

 Earl Cryer/Bloomberg
Earl Cryer/Bloomberg
Updated: Wed, Jun 16 2010. 10 07 PM IST
New Delhi: Qualcomm Inc., the US chipset manufacturer that paid Rs4,912.54 crore for spectrum to offer wireless broadband services in Delhi, Mumbai, Kerala and Haryana, is in talks to sell 26% stake in the subsidiary that will do this to an Indian firm.
According to Indian laws, Qualcomm needs an Indian partner which holds at least 26% stake in the venture to apply for an Internet service provider (ISP) licence from the department of telecommunications (DoT).
Qualcomm, which is pushing its technology to operators that will offer broadband services, paid Rs4,912.54 crore for spectrum in four key markets in the recently concluded auction for broadband wireless access (BWA) spectrum.
“Qualcomm will finalize the discussions and make the announcement on who their Indian partner is within the next 15 days,” a person familiar with the development said on condition of anonymity. “They are talking to a number of operators,” he added without getting into the details of which these companies are.
Earl Cryer/Bloomberg
The plan is for Qualcomm to identify a partner and sell stake to it, apply to DoT for a licence and seek required clearances from the foreign investment promotion board (FIPB), which regulates all foreign investments in India, among other regulatory clearances before rolling out its network. The winners of the auction are expected to be allotted spectrum in September.
“We cannot comment on our partner strategy and related details at this point,” said Kanwalinder Singh, president of Qualcomm India and South Asia, and senior vice-president of Qualcomm.
Apart from this, Qualcomm plans to create a consortium of telecom companies that offer 3G (or third-generation telecom) services in the country, said the person cited in the first instance. According to him, telecom firms that start offering services on 3G spectrum that they have won in the auction will face a capacity constraint in the next two years, especially in the more congested parts of the country. Qualcomm will offer these operators the option of latching on to its network, thereby reducing congestion in the 3G network “through some commercial arrangement”. The telcos will also be offered the option of investing in the Qualcomm subsidiary, this person added.
Qualcomm plans to use the BWA spectrum to build an overlay network over the 3G networks that will be built by the telcos that won spectrum in the earlier auction. This would allow 3G operators to easily latch on to the so called LTE (long-term evolution) network when needed. LTE technology is considered the next generation of 3G mobile telephony and when the time comes the operators would be able to seamlessly hand off their subscribers to that network. The building of an LTE network on the ground would also allow operators, wanting more information on the technology, to see it working on the ground. The technology, incidentally owned by Qualcomm, is still in its infancy and is being tested.
Qualcomm’s strategy to build an LTE network would also appear to be the logic behind its approach to the BWA auction. Qualcomm only bid for circles where the capacity constraint from 3G services would start the earliest due to the demand for high-speed data connectivity on mobile phones.
“Our bidding objective was to secure an enabling role in the continued success of Indian operators with 3G and beyond, and we are extremely gratified we met that objective. With its ecosystem partners, Qualcomm will now foster the deployment of LTE, so Indian consumers can enjoy the benefits of 3G now and 3G plus LTE in the future,” Singh said in a statement after the auction results were announced.
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First Published: Wed, Jun 16 2010. 10 07 PM IST