Qualcomm to Divest Indian Venture - Analyst Blog

Qualcomm Inc. QCOM recently received the regulatory approval in India to divest its remaining stake in Broadband Wireless Access BWA spectrum to the local operator Bharti Airtel.

In 2010, Government of India conducted a spectrum auction for both 3G network and broadband wireless access. Qualcomm paid $1.045 billion to obtain the BWA operating license in four major service areas of New Delhi, Mumbai, Kerala and Haryana.

Qualcomm initially planned to divest its full stake after creating a next-generation (4G) LTE (Long-Term Evolution) network to roll out super-fast broadband wireless access services. The fast-growing broadband market is attracting substantial investments for deploying LTE networks in India.

In Jul 2010, Qualcomm sold 24% stake of its Indian broadband venture to Indian telecom operators Global Holdings Corp. and Tulip Telecom Ltd. for a consideration of around $58 million. In 2011, The Economic Times reported that Bharti Airtel may offer around $1.2–$1.3 billion to acquire the remaining 74% stake of the venture.   

In May 2012, Qualcomm sold a 49% stake in the holding company to Bharti Airtel for $165 million. In Oct 2012, Bharti Airtel raised its stake to 93.45% in the holding company. With the permission from the Indian regulator, Department of Telecommunications (DOT), Bharti Airtel can now have full ownership of the holding company.

In 2012, Qualcomm sold the 700 MHz wireless spectrum of its filed mobile TV venture called “FLO TV”, to AT&T Inc. T for $1.925 billion. In 2013, the company sold its subsidiary Omnitracs Inc. to Vista Equity Partners, a U.S.-based private equity firm, for $800 million.  

Other Stocks to Consider

Currently, Qualcomm carries a Zacks Rank #2 (Buy). Other stocks in the wireless equipment industry that warrant a look includes Juniper Networks Inc. JNPR and ShoreTel Inc. SHOR. Both these stocks carry a Zacks Rank #1 (Strong Buy).