Qualcomm may revive talks with Reliance

Under pressure from investors and major revenue contributors, chip maker Qualcomm may commence fresh round of talks with code division multiple access (CDMA) operators, including Reliance Communications in India, in the face of the company's market capitalisation declining steeply.

The San Diego-based technology major, facing ire of third world CDMA operators for higher royalty charges, hinted that the negotiations with CDMA majors in third world countries are likely to start soon.

"I think that's going to continue on and there's a lot of negotiating back and forth that's currently happening", Qualcomm CEO Paul Jacobs told analysts after announcement of the company's financial results last week.

Qualcomm, the developer of CDMA technology, has lost Rs 1,21,500 crore ($27 billion) in market capitalisation in the last ten weeks.

This move comes weeks after his unfruitful visit to India in June-end where he refused any kind of negotiations on the royalties and chipset costs issue.

Paul Jacobs had an eight hour-long discussion with Reliance Communication chief Anil Ambani, whose company is planning to focus on GSM services. But the negotiations failed over the issue of royalty price cut.

As Qualcomm refused to discuss the royalty issue, Reliance Communications, along with Brazilian CDMA player Vivo, have expressed plans to migrate to GSM technology for future growth.

Adding to the woes of Qualcomm, world's largest handset maker Nokia shelved its CDMA handset manufacturing plans by taking a one time hit of Rs 750 crore.

In the analyst meet, Paul Jacobs also made the intentions of Qualcomm on persuading Reliance to favour CDMA over GSM for future expansion.

According to a report on the Indian telecom sector by global consultant Credit Suisse, the share of CDMA subscribers in the Indian market will come down to seven per cent by 2010 while that of GSM will grow from 75 per cent at present to 93 per cent as the Indian ecosystem for GSM operators was much better than CDMA operators.

Currently, the subscriber base of Reliance stands at 22.5 million, accounting for 7 per cent of global CDMA market.