Bharti Airtel is all set to buy Qualcomm’s India broadband wireless licenses for US$ 1.2 bn. Qualcomm has licenses in Delhi, Mumbai, Kerala and Haryana and paid US$ 1.1 bn in Jun 2010 during BWA (Broadband Wireless Access) spectrum auctions.
So what does this mean for Bharti Airtel’s Broadband / Wireless Data Strategy ?
Bharti would gain access to the lucrative high ARPU Mumbai and Delhi circles complementing its existing licenses in Maharashtra and Karnataka (RIL owned Infotel is the only LTE (Long Term Evolution) competitor in these circles). Bharti Airtel will have acquired the license almost at the same cost as Qualcomm acquired it for in Jun 10 but at a lower risk as now there is better visibility on the roadmap of LTE as WiMax miserably failed under the leadership of Intel which does business more like a lobbyists than function of Market Forces.
Qualcomm has always expressed interest in selling its licenses, we believe Bharti’s move to acquire licenses would keep any potential new competitor out. Internationally, historical precedence indicates that incumbents have generally been aggressive in acquiring any spectrum up for sale, in order to strengthen their dominance and keep potential competitors away. From a Qualcomm perspective its intention is to promote LTE over WiMax has been achieved and therefore it makes logical sense to exit the market (as it is not an operator).