Airtel’s plans to launch 4G services in Delhi and Mumbai is in trouble as the Competition Commission of India has asked Qualcomm to apply afresh for merging its four broadband subsidiaries (a subsidiary each for 4 circles that it acquired spectrum for) into Qualcomm Asia Pacific.
Airtel has recently bought 49 per cent stake in the BWA venture of Qualcomm (after it had applied with competition commission) and that is the reason why the commission wants Qualcomm to submit fresh application again.
Qualcomm secured 4G spectrums of Delhi, Mumbai, Haryana and Kerala in the auctions held in 2010. Qualcomm’s BWA venture has been trouble ever since it applied for it, first with the FIBP (foreign investment promotion board) clearance, then with DoT with regards to ISP license (Internet service provider), then it was denied the spectrum and now this new clearance hurdle from Competition commission.
The commission has told Qualcomm that since Airtel bought the stake in the venture after it had applied with the commission, and Airtel being already present as telecom operator it would be important for the commission to look into how it affects competition in the sector.
The Commission, in its order, said that in its current form, the combination of Airtel and Qualcomm is likely to give rise to adverse competitions and the directed the parties in question to apply with fresh details.
Qualcomm had approached the anti-monopoly watchdog for combination of its four subsidiaries. At the time of the application, Qualcomm had 74 per cent equity share capital of each of the four subsidiaries. The balance 26 per cent equity was owned by Tulip Telecom and Global Holding Corporation. On May 29, Bharti Airtel acquired 49 per cent stake in Qualcomm’s 4G business in India for Rs 923 crore.
The US based chip maker will continue to hold 51 per cent till it exits India in the next two years. Bharti will take Qualcomm’s Rs 4,000-crore debt on its books when it will acquire 100 per cent stake in the venture in 2014.