Reliance Communications and the US wireless technology major Qualcomm Inc announced here today that the San Diego-based company had picked up a stake in Reliance Communications for $200 million (Rs 960 crore). Qualcomm chairman and CEO Irwin Mark Jacobs declined to reveal how much equity his company had bought but Reliance sources put the figure at about three per cent.
The deal involves supplying CDMA (code division multiple access) wireless technology. Jacobs said Qualcomm would offer technical know-how and design capabilities to vendors who want to make CDMA 2000 IX handsets. India will be the largest market after China for Qualcomm, where it already has a large presence. But Jacobs declined to disclose any sales target for CDMA handsets, though he said that the company had set one internally. The phones will be sold in India for less than Rs 5,000.
Qualcomm will supply CDMA 2000 ix technology, which permits phones to incorporate data, video and voice facilities, apart from 3G technology.
The deal also marks Qualcomm's big leap into India. The company is considering setting up a software development centre and is talking to Indian companies about a possible digital cinema venture. "We may set up a software development centre in India. We are also talking to some players to offer digital cinema services," Jacob said.
Reliance Communications is setting up a nationwide CDMA network to provide limited mobility services in 18 basic telecom circles soon. The service is expected to be rolled out in 10 high telecom density cities by June 2002.
"This investment will help us make a strategic entry into the burgeoning telecom market in India," Jacobs said.
Qualcomm's $200 million investment in a three per cent stake implies that Reliance Communications has been valued at around $6.6 billion. Jacobs said that both the sides had brought in independent valuers to value the company. However, Jacobs clarified that he would not be joining the Reliance company's board.
Reliance Industries vice-chairman Mukesh Ambani said: "We intend to offer basic telephone services, wireless in local loop with limited mobility and long distance services. We will leverage the cost, capacity and quality of CDMA to offer the most competitive wireless voice and data services."
