Bharti buys Qualcomm - sets up 4G battle with RIL

New Delhi: This should make the coming 4G battle between Reliance Industries Ltd (RIL) and Bharti Airtel even more interesting.

On Thursday, Bharti announced the acquisition of 49 percent equity in Qualcomm Asia Pacific’s (Qualcomm AP) Indian entities for $165 million (which means about Rs 924 crore) to spread its 4G footprint. Qualcomm has 4G broadband wireless access (BWA) licences in four key circles which Bharti complement’s Bharti’s own licences.

By 2014, Bharti will acquire 100 percent of Qualcomm’s BWA entities in its quest for a pan-Indian 4G presence. Qualcomm AP’s India entities hold BWA licences in Delhi, Mumbai, Haryana and Kerala and the acquisition has been done by acquiring the 26 percent equity interest equally held by Qualcomm’s Indian partners, Global Holding Corporation and Tulip Telecom. The balance equity has been acquired by way of subscription to fresh equity in those entities.

It is interesting to note that Bharti’s acquisition of Qualcomm’s BWA entities has been done within days of the American chipmaker getting BWA spectrum. It was originally supposed to get this spectrum in 2010, along with other 4G aspirants like Reliance Industries, Tikona Digital, Augere, etc. But because of hectic lobbying by a rival, spectrum allocation was delayed by almost two years.

As of now, Reliance Industries is the only pan-Indian 4G player but it does not appear close to even launching services. Some reports have suggested it might begin by December this year, some others say the launch may be delayed till April. And already Augere has stated its intention to exit the Indian market due to an uncertain policy environment. So Bharti buying Qualcomm’s stake is significant because it provides the company a matching footprint to that of RIL - it already has the first mover advantage, having launched services in Kolkata.

A Bharti statement said that the agreement contemplates that once commercial operations are launched, subject to certain terms and conditions, Bharti would assume complete ownership and financial responsibility for the BWA entities by the end of 2014.

Bharti already has BWA licences in four circles - Kolkata, Karnataka, Punjab and Maharashtra - and 3G licences in 13 circles in India. The statement claimed that with this agreement, Bharti has secured nation-wide broadband leadership through a combination of 4G and 3G, with its own networks in 18 circles. Bharti has already become the first 4G operator by launching services in Kolkata and Karnataka.

Chairman and MD Sunil Bharti Mittal said, “We are delighted to partner with Qualcomm, which shares our commitment to the government’s agenda of broadband for all. This partnership will combine the strength of Bharti’s national telecom footprint and Qualcomm’s technological leadership in the LTE TDD space. With a broadband ready network across India, Bharti is well positioned to lead the next phase of Indian’s telecom revolution.”

And Paul E Jacobs, Chairman and CEO of Qualcomm, said: “One of our key objectives has been to include a strong partner in the Indian venture with the scale, experience and resources to deploy LTE TDD networks. We are pleased to have Bharti’s participation and support in this effort.”

Qualcomm expects to provide technical assistance to Bharti in connection with network architecture and optimisation, infrastructure and device testing, as well as continuing to develop and support the underlying technology and the LTE TDD ecosystem.