Bharti Buys 49% Stake in Qualcomm India Broadband Unit

Bharti Airtel Ltd. (BHARTI), India’s largest mobile operator, bought 49 percent of Qualcomm Inc. (QCOM)’s fourth-generation wireless venture that will expand coverage of high-speed services to include the nation’s two biggest cities.

Bharti paid $165 million to purchase the stake in Qualcomm’s India unit, which owns licenses and spectrum to operate in four telecommunications zones, according to an e-mail statement today. Bharti will buy the rest of Qualcomm’s stake by the end of 2014, according to the statement.

Qualcomm, the biggest maker of mobile-phone chips, bought the licenses at an auction two years ago with the goal of propagating 4G technology known as long-term evolution, or LTE, in India and then selling them to a local operator. The deal doubles Bharti’s area for high-speed data coverage in the world’s second-largest market for mobile-phone services.

The spectrum, which allows operators to provide higher-cost services such as video downloads and streaming media, is coveted in India because call rates have fallen to as low as a penny a minute. The deal, including assumed debt, at completion in 2014 will be worth as much as $1.2 billion, according to a person familiar with the deal.

Qualcomm, based in San Diego, bought licenses for Mumbai and the states of Delhi, Kerala and Haryana in a government auction in June 2010, paying 49.1 billion rupees ($882 million) for the rights. About 80 percent of the purchase was financed with debt, two people familiar with the matter said.

Local Partners

Bharti bought Qualcomm’s local partners Tulip Telecom Ltd. (TTSL) and Global Holding Corp., which each held 13 percent of the joint venture. Tulip and Global each received about $40 million in cash from Bharti, one of the people said. Barclays Plc advised Qualcomm on the deal.

Raza Khan, a spokesman for Bharti, and Ramakrishna Bellam, a spokesman for Global Holding, declined to comment. Tulip Chairman Hardeep Singh Bedi also declined to comment.

Bharti, based in New Delhi, also participated in the 4G auction in 2010, agreeing to pay 33.1 billion rupees for permits in the states of Maharashtra, Karnataka, Punjab and Kolkata.

India, which divides the nation into 22 telecommunication zones, auctioned the licenses individually.

Infotel Broadband Services Ltd., now a unit of billionaire Mukesh Ambani’s Reliance Industries Ltd. (RIL), was the only company that secured 4G licenses in all 22 zones.

Shares of Tulip rose 2.7 percent to 75.45 rupees at close in Mumbai. Bharti surged 5.6 percent to 297.80 rupees, the most since Feb. 2.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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