Qualcomm may book significant losses to exit from 4G LTE venture

Telecom Lead India: Chip major Qualcomm is likely to book
significant losses to exit from 4G LTE venture in India.

Bharti Airtel is buying 49 percent stake in Qualcomm’s 4G
LTE venture for $165 million against nearly $1 billion paid by Qualcomm during
the 2010 BWA auction.

According to Qualcomm’s quarterly report, during the
second quarter of fiscal 2012, Qualcomm received $1.9 billion in proceeds from
the sale of substantially all of its 700 MHz spectrum in the U.S.

The chip major reported $81 million in other operating
expenses related to a payment made to the Indian government in connection with
the issuance of the BWA spectrum license.

Airtel has an option to buy out the remaining stake by 2014.
In the next few years, considering the slow growth of LTE in India, the venture
will not fetch significant valuation. This will force Qualcomm to book
significant losses, analysts said.

But India is a very important market for Qualcomm for its
TD-LTE business. Any loss in this transaction can be covered by the anticipated
boom in the market after 2-3 years.

TD-LTE subscribers to reach 5 million by 2013 in Indian telecom
market

Agency reports said Qualcomm sold 26 percent stake to Indian companies Global
Holding and Tulip Telecom for about $58 million to comply with the sector’s
foreign holding rules.

The venture’s equity value was about $223 million and enterprise value, which
includes debt, was more than $1 billion in 2010 when it entered into the stake
sale agreements with the two Indian companies.

The List of BWA Winners (Private Operators )-:

editor@telecomlead.com