Mobile chip maker Qualcomm (Nasdaq: QCOM) has finalized Global Holding Corp Pvt. Ltd. and Tulip Telecom Ltd. as initial partners for its India long-term evolution (LTE) joint venture to offer wireless broadband services in India.
Subject to receipt of government approvals, Qualcomm will have a 74 percent stake in the venture, while Global Holding Corp and Tulip Telecom will hold 13 percent each, as required by applicable Indian Foreign Direct Investment regulations.
Qualcomm, which has Broadband Wireless Access spectrum in four telecom circles in India, sold its 26 per cent stake in its Indian broadband unit to Tulip Telecom and Global Holdings for about $58 million.
The move comes at a time when the Indian government has been pushing to increase broadband Internet usage in a country where only over nine million out of over 1 billion population have access to such connectivity.
Qualcomm spent over $1 billion recently to win a license and bandwidth to offer wireless broadband in four service areas of Delhi, Mumbai, Kerala and Haryana in a government-run auction.
"The yet to be named unit's enterprise value is about $1.11 billion and the equity portion is $222 million, while the remaining $888 million is debt," Kanwalinder Singh, president of Qualcomm India and South Asia and senior vice president of Qualcomm said in a statement.
Global Holding provides infrastructure services to India's mobile operators, while Tulip Telecom offers networking services across industry verticals such as telecom, banking and financial services.
"Our objective was to secure initial shareholders who are operator-neutral, yet bring strong telecom and broadband experience, and we are extremely pleased we met that objective with Global Holding Corporation and Tulip Telecom," said Singh added.
Under the venture, Qualcomm will facilitate accelerated deployment of LTE in concert with 3G HSPA and EV-DO networks.
Qualcomm said it also expects to attract one or more experienced 3G HSPA and/or EV-DO operators into the venture for construction of an LTE network and then to exit the venture.
LTE is a technology that offers high-speed broadband and high-end multimedia services.
Barclays Capital is acting as exclusive financial advisor to Qualcomm on India LTE venture partner selection process.
Shares of California-based Qualcomm closed Thursday's trading at $38.78 on Nasdaq.
International Business Times, The Global Business News Leader
