Bharti Airtel, on Thursday, announced a Rs.922 crore ($165 million) deal with Qualcomm Asia Pacific, a move that will help the telecom operator establish a stronghold in the fast-growing high speed internet services.
The Bharti Group firm has acquired 49 per cent stake in Qualcomm Asia Pacific's Indian broadband wireless access (BWA) entities with licences to offer 4G data services in four circles of Delhi, Mumbai, Haryana and Kerala.
Bharti Airtel would complete ownership of Qualcomm AP's Indian entities by 2014, according to the agreement signed here.
“The agreement contemplates that once the 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,” the company said in a statement.
The Rs.71,450 crore company (revenue) with a subscriber base of 25 crore had bagged BWA licences in four circles — Kolkata, Karnataka, Punjab and Maharashtra — on its own. It has already launched the high speed data services in Kolkata and Bangalore.
Bharti Airtel will buy 26 per cent stake in Qualcomm AP from Global Holding Corporation and Tulip Telecom (13 per cent) and the balance 23 per cent by subscribing to fresh equity of Qualcomm.
Global Holding Corporation and Tulip Telecom had bought 13 per cent stake each in the BWA entities for $57.72 million (about Rs.268 crore) in 2010. “This partnership will combine the strength of Bharti's national telecom footprint and Qualcomm's technological leadership in the LTE TDD (4G) space. With a broadband ready network across India, Bharti is well positioned to lead the next phase of Indian's telecom revolution,” Bharti Airtel Chairman and Managing Director Sunil Bharti Mittal said.
Mukesh Ambani-led Reliance Infotel is the only company to have pan-India (22 circles) BWA spectrum for the 4G services.
However, it is yet to launch the service.
With Bharti Airtel acquiring Qualcomm AP's stake, the Sunil Mittal-led group will be able to offer services in eight circles, with the first mover advantage.
Investors gave a thumps up to the deal with Bharti Airtel shares closing 5.62 per cent up at Rs.297.80 on the Bombay Stock Exchange.
Bharti also has 3G licences in 13 circles and a pan-India presence in 2G voice and data services.
The company with a net debt of about Rs.65,000 crore did not disclose the source of funding for the deal with Qualcomm AP.
Operators are betting big on 3G and 4G services as these offer better margins than traditional voice calls.
Qualcomm expects to provide technical assistance to Bharti Airtel 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 eco-system.
“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 Chairman and CEO Paul E Jacobs said.
Qualcomm has already announced its plans to exit the venture after creating a long-term evolution, or LTE, network to roll out broadband wireless access services. LTE is a technology that offers high speed broadband and high-end multimedia services.
Qualcomm, which faced a tussle with the Department of Telecom, was granted BWA spectrum earlier this month, nearly two years after the auction. Its usage period has however been reduced by 18 months.
