Qualcomm Inc. (QCOM), the leading chipset maker for mobile handsets worldwide, is currently facing the risk of losing its venture in India. In June 2010, the company won spectrum for broadband wireless access (BWA) for $1.045 billion, which was auctioned by the Ministry of Telecommunications of India. Qualcomm obtained operating license in four major service areas of New Delhi, Mumbai, Kerala and Haryana.
However, recently the Department of Telecommunications (DOT) of India rejected Qualcomm’s application seeking license to offer mobile Internet services in those four circles. The DOT stated that the company failed to comply with the stipulated time period that was mandatory for license application. On the other hand, Qualcomm argued that it applied within the stipulated time period of 3 months and will further negotiate with the concerned authority for smooth sailing of its Indian venture.
Qualcomm plans to divest its full stake in India after creating a next-generation (4G) LTE (Long-Term Evolution) network to roll out super-fast broadband wireless access services. LTE is the emerging mobile technology that offers extremely fast broadband access speed and high-end multimedia services.In July 2010, Qualcomm sold 24% stake of its Indian broadband venture to Indian telecom operators, Global Holdings Corp. and Tulip Telecom Ltd. for a total consideration of around $58 million. Industry sources also rumored that the company intends to dispose its remaining 76% stake in BWA spectrum to the local operator Bharti Airtel for around $1.2 billion–$1.3 billion.
Nevertheless, the ongoing regulatory hassles will certainly delay Qualcomm’s plan for its Indian operation. As per DOT rule, Qualcomm can not claim for refund if the Indian authority ultimately rejects its license application. Meanwhile, the company is also facing uncertainty regarding its deal to sell its FLO TV 700MHz spectrum licenses to AT&T (T) for $1.925 billion. If the proposed merger of AT&T with T-Mobile USA gets regulatory approval, AT&T may need to abandon its decision to purchase Qualcomm’s FLO TV spectrum as a pre condition.
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