Ready to sell it off without a premium.
US telecom giant Qualcomm has approached all leading telecom operators, including Reliance Communications, Vodafone Essar, Airtel and Aircel, to sell its remaining wireless broadband interests in the country. It had bought wireless spectrum in Mumbai, New Delhi, Haryana and Kerala earlier this year.
Qualcomm has made it clear that it wants to get out of the BWA (broadband wireless access) business and is ready to sell it off without a premium as long as it recovers its cost, according to sources to whom presentations were made by the US-based chip maker. Qualcomm said it was making a transparent offer to all potential buyers, as all of them would also be its potential clients for buying its long-term evolution technology (LTE).
Qualcomm recently sold a 26 per cent stake in the BWA company to Tulip Telecom and Global Holdings for $57.72 million. A foreign entity can’t hold more than 74 per cent stake in an Indian telecom venture.
Qualcomm holds 74 per cent in the venture. The unit’s enterprise value stands at about $1.11 billion and the equity portion is $222 million, while the rest is debt, according to Qualcomm India and South Asia President Kanwalinder Singh, who spoke to reporters recently.
Qualcomm had earlier said the company would partner with one or two telecom companies and bring them into the venture.
“Qualcomm told us that with most of the key companies in BWA choosing LTE technology over WiMax, it has no reason to be in these services at all. What the company wants is to get back what it has spent on the licences, plus interest cost, some other spectrum fees and, of course, cost of hiring some staff,” sources said. The company forked out Rs 4,913 crore for 20 MHz of spectrum in the four circles.
“Qualcomm has publicly stated that it will work with 3G operators to develop the 3G+LTE ecosystem, commercially deploy LTE TDD (Time Division Duplex) in the BWA spectrum, and then exit its India LTE Venture. Consistent with those goals, discussions with operators on LTE TDD commercialisation and commercial discussions related to Qualcomm’s BWA spectrum are indeed ongoing. However, these discussions are confidential and Qualcomm can’t comment on speculation regarding specifics,” Qualcomm India said.
A top executive at Maxis Communications, which has a majority stake in Aircel, said: “They have approached us we have not approached them.” Vodafone Essar declined to comment. Telecom operators, who were contacted, said most leading operators, who were busy launching their 3G services and had the opportunity of bidding for BWA, desisted from doing so, as they wanted to concentrate on rolling out 3G. “A call on whether to invest in LTE, considering the fact that there are few networks up and running, will be taken only after 3G services stabilise,” said a leading Indian telco, which was approached.
Qualcomm, which sells chipsets and various technologies, does not get into services anywhere in the world. But it did so in India, essentially to back LTE, as it is working on chipsets, which will make possible seamless transfer of data from 3G to LTE in a mobile device, without customers knowing the change.
