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Bharti buys out Qualcomm in 4G JV

May compete with Reliance Jio in Mumbai and Delhi.

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US chipmaker Qualcomm, the minority partner in a 49:51 internet broadband joint venture (JV) with Bharti Airtel, will exit India as per its original plan, and the latter will buy out its stake, thus making the Qualcomm-founded JV, Wireless Business Service (WBSPL), Bharti’s 100% unit.

The Qualcomm exit news comes three years after the company participated in the broadband wireless access (BWA) auctions and bought licences for $1 billion to offer high-speed internet services in the four circles of Mumbai, Delhi, Haryana and Kerala.

Bharti, however, did not disclose the amount it paid Qualcomm for the 49% residual stake in WBSPL. Bharti had acquired a 49% stake in May 2012 for $165 million. It increased its stake to 51% in July this year.

In 2010, Airtel had successfully bid for BWA licence spectrum in Kolkata, Karnataka, Punjab and Maharashtra (excluding Mumbai) circles for Rs 3,314.36 crore.

With Friday’s acquisition of Qualcomm’s BWA spectrum, Bharti Airtel will now have access to eight circles to launch 4G services. Thus, with eight BWA licences in the 4G space, Bharti is now next only to Reliance Jio which has pan-India spectrum.

Mahesh Uppal, director, Com (First) India, a firm dealing in telecom regulatory affairs, said Bharti Airtel is positioning itself for brisk action in the wireless space, potentially making the going difficult for Reliance Jio. “Airtel has the upper hand in terms of subscribers and a well-established network, though Rel-Jio has deep pockets. But both of them will face competition from the fixed line space which is better established in big cities, more stable and cheaper compared to 4G’s weak ecosystem.”

Uppal further said that it is 3G, not 4G, that will see intense action in the days to come. “Thus, there is no immediate threat to Rel-Jio due to Airtel’s 4G expansion. Well, 4G has huge potential, but in future, not in the immediate term.”

Friday’s exit announcement comes as sweet relief for Qualcomm, analysts said. For, it has faced numerous challenges in India, chief amongst them being the shrinking of its licence tenure to 18.5 years from 20 years, and the relatively fewer years (3.5, not five that competitors get) to complete rollout obligations.

Nitin Padmanaban of Espirito Santo Securities said, “The deal has taken a while longer than expected to close due to regulatory hurdles, but 100% FDI (foreign direct investment) has definitely speeded things up.”

Friday’s deal could herald similar developments as the government had approved 100% FDI in the telecom sector in August. For instance, Vodafone UK plans to acquire its Indian subsidiary Vodafone India; Singapore’s Singtel plans to buy out its entire stake in Bharti Airtel; Japan’s Docomo’s plans to increase its stake in the Tata-Docomo JV; and, Norway’s Telenor and Russia’s Sistema will likely also buy out their Indian partners’ stakes to fly solo in India.

Airtel already has 4G services in Kolkata, Bangalore, Pune, Chandigarh, Mohali and Panchkula.
4G  technology can deliver super-fast access to data services like streaming of high-definition or HD videos, multiple chatting, instant upload of images, quick downloads of rich content and so on.

Qualcomm’s journey in India
2010 — Enters Indian telecom space by founding Wireless Business Service
2011 — Buys licences for $1 bn to offer high-speed internet services in 4 circles
May 2012 — Sells 49% stake to Bharti for $165 m
Jul 2013 — Sells 2% more to Bharti
Oct 2013 — Decides to exit India

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