Qualcomm sells stake in India unit for $58mn

Qualcomm sells stake in India unit for $58mn

New Delhi: Qualcomm has agreed to sell 26% stake in its India broadband venture to Indian firms Global Holdings and Tulip Telecom for about $58 million, the US-based mobile chip supplier said on Friday.

Global Holdings, which owns telecom infrastructure firms GTL Ltd and GTL Infra, and communications services provider Tulip Telecom will buy 13% each in the newly formed Qualcomm’s broadband unit in India.

Qualcomm spent about $1 billion to buy wireless airwaves in a recent auction in India. The company is betting that ownership of the airwaves in India will boost sales of advanced cell phones and the chips that power them.

According to Indian laws, Qualcomm’s stake in the Indian broadband venture cannot exceed 74%, and the remaining stake should be owned by Indian companies.

Qualcomm’s equity investment for 74% stake in the broadband unit will be $164.3 million, the company said.

Qualcomm expects to get broadband spectrum in two to three months time and aims to launch broadband services in 2011, said Kanwalinder Singh, president for Qualcomm’s Indian and south Asian operations.

Qualcomm, which previously won spectrum bids in the United States and Britain, bagged wireless broadband spectrum in four of India’s 22 telecom zones, including the lucrative Delhi and Mumbai cities.

Qualcomm will compete in India with billionaire Mukesh Ambani’s Reliance Industries that made a dramatic return to telecom after agreeing to buy the only company that had won wireless broadband spectrum in all 22 zones.

India’s broadband penetration -- connections per 100 people -- is extremely low at 0.7, whereas more than half of the population have a telephone, according to the Indian telecom regulator.

Consolidation is underway in India’s telecom tower sector as carriers opt for mergers or alliances to be cost efficient.

In June, GTL Infra agreed to buy the telecom tower business of Reliance Communications, to create what it said would be the world’s largest telecom infrastructure firm not controlled by an operator.

In January, GTL Infra agreed to pay $1.8 billion for Aircel’s towers. A month later, US-based American Tower Corp announced plans to buy the tower unit of India’s Essar Group for $432 million.

By 1.05 p.m., shares in GTL Infra was 0.7% higher at Rs46.25 and Tulip Telecom was nearly unchanged at Rs185 in the benchmark Mumbai market that down 0.2%.