25.5.12

Airtel's 4G play

The country’s largest mobile phone operator Bharti Airtel has acquired a 49% stake in US-chipmaker Qualcomm’s Indian unit holding 4G broadband wireless licences for $165 million (Rs 924 crore). The Sunil Mittal-led telco, making a big push in the broadband play, is expected to take full ownership of the venture over the next two years. The deal involved Bharti buying a 26% stake equally held by Global Holding Corporation and Tulip Telecom apart from subscribing to fresh equity. Bharti gets access to Qualcomm’s broadband licences in four circles, including the two major regions of Mumbai and Delhi. The telco already had 4G permits in four circles of Kolkata, Karnataka, Punjab and Maharashtra. It recently rolled out 4G services in Kolkata and Bangalore. Barclays Capital advised the San Diego-based Qualcomm on the deal. With this acquisition, Bharti effectively gets a national footprint in broadband through a combination of 4G and 3G networks. The telecom major has 3G licences for 13 circles. Reliance Industries-owned Infotel Broadband which won pan-India licences for 4G services will be a direct competitor to Bharti and is expected to launch its services by end of the year. Qualcomm had forked out a little over Rs 4,900 crore, mostly through debts, for the licences two years ago 
Both Global Holding Corporation and Tulip Telecom exited after investing Rs 140 crore each for a combined 26% stake. Bharti is expected to acquire the remaining 51% stake of Qualcomm by the end 
of 2014 at a valuation based on certain parameters, but at a price not higher than the fair market value. Multiple mobile operators, including Aircel, had initially approached Qualcomm which wanted to sell stake to a telecom biggie. But the rival bidders dropped out after the telecom sector was rocked by scandals and regulatory uncertainties in recent past.

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