GTL, the Mumbai-based tower and telecom infrastructure company, is close to an agreement with US telecom giant Qualcomm Inc to take up to 26 per cent stake in the latter’s proposed broadband wireless access (BWA) services company.
Qualcomm is one of 11 bidders in the ongoing auction for BWA spectrum, which promises high-speed broadband services through wireless. The deal is, of course, subject to Qualcomm winning either a pan-India licence or one in some of the 22 circles across the country.
The government is auctioning two slots across the country of 2.3 MHz of spectrum each, with a reserve price of Rs 1,750 crore for a pan-India network. With telcos in a bidding war, the price for this had already hit Rs 6,273 crore on the fifth day of bidding, three-and-a-half times the base price. Buoyed by the success, the government expects to earn Rs 30,000-40,000 crore from the BWA sale.
As part of the government policy on foreign direct investment, foreign telcos may invest only up to 74 per cent in telecom services. However, they have been allowed to bid without having an Indian partner. That is the reason Qualcomm will now have to look for one.
The spokespersons of both GTL and Qualcomm declined to comment on the issue. However, sources close to the deal say Qualcomm could also look for another Indian investor to join in, if it wins the bid.
The GTL deal makes immense sense for Qualcomm. It could then roll out its services faster, as well as at a lower investment cost, by leveraging the 31,000 towers GTL would have after completing its acquisition of the tower business of Aircel. GTL acquired the business this January for Rs 8,400 crore, making it the second largest independent tower company in India, close to Qippo.
Experts reckon telcos would require over Rs 5,000-6,000 crore to roll out a BWA service, a problem for companies such as Qualcomm which are technology providers and do not have an infrastructure or network to run telecom services on their own. The US company, which controls proprietary CDMA technology, has Reliance Communications, Tata Communications and Sistema for clients, among others, in India.
Apart from Qualcomm, the other companies bidding for BWA spectrum include Bharti Airtel, Idea Cellular, Vodafone-Essar, Spice, Tata Communications, Tikona Digital (promoted by former Reliance Communications employees), Reliance ADAG and Infotel Broadband.