Bharti Airtel, India's biggest mobile phone carrier, said on Thursday it agreed to buy a 49 percent stake in Qualcomm Inc's fourth-generation (4G) broadband venture in the country for $165 million.
Bharti will buy a 26 percent stake held by two Indian partners in the Qualcomm broadband venture and the remaining by subscribing to fresh equity, the company said in statement, sending its shares as much 6.9 percent higher.
Qualcomm, which spent nearly $1 billion to buy 4G airwaves in a 2010 auction, had sold a total 26 percent stake to Global Holding Corp and Tulip Telecom for about $58 million to comply with the sector's foreign holding rules.
As part of the agreement, Bharti will buy the remaining 51 percent stake in the broadband venture by 2014, and Qualcomm will exit the venture but will continue to provide technology services, said a source with knowledge of the situation.
The acquisition will give Bharti access to four telecoms zones, including the lucrative Delhi and Mumbai cities, where it does not have its own 4G airwaves.
Shares in Bharti, valued at about $20 billion, ended up 5.6 percent to post their biggest single day gain in more than three months, while the broader Mumbai market closed 1.7 percent higher.
Bharti, which won 4G airwaves in just four of India's 22 telecoms zones, has said it would like to have a nationwide 4G broadband network. The company recently launched commercial 4G networks in Kolkata and Bangalore cities.
Qualcomm, which was embroiled in a dispute with the telecoms ministry, was granted the 4G airwaves this month, nearly two years after it won them in the auction. The ministry cut the usage period of the airwaves by 18 months.
Qualcomm, which is pushing for the deployment of LTE (long-term evolution) broadband technology in India, has previously said it is looking at one or more operator partners in the India broadband venture.
Reliance Industries, controlled by India's richest man Mukesh Ambani, is the only company to have 4G airwaves in all 22 telecoms zones in India. Reliance is yet to start commercial services.
Barclays advised Qualcomm on the deal, the source said.
© Thomson Reuters 2012