The Competition Commission of India has asked Qualcomm to apply afresh for merging its four broadband subsidiaries into Qualcomm Asia Pacific.
The Commission has told the US chipmaker that its current application was not valid since the shareholding pattern had changed in the ventures following an acquisition by Bharti Airtel
On May 8, Qualcomm had approached the anti-monopoly watchdog for combination of its subsidiaries, including Wireless Business Service, Wireless Broadband Business Service, Kerala and Wireless Broadband Business Service, Haryana into Qualcomm Asia Pacific.
Bharti buy
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.
“Bharti has presence in the telecom infrastructure. Therefore, it is observed that facts relating to Bharti which are required to be examined for the purpose of assessment of the proposed combination in term of the notice have not been dealt in the notice,” the CCI said, adding that the earlier notice is treated as not valid.
The Commission, in its order, said that in its current form the combination is likely to give rise to adverse competitions and the directed the parties in question to apply with fresh details.
Current deal
Qualcomm had formed these four subsidiaries as the Department of Telecom had refused to give four licences to the company. Qualcomm had won broadband spectrum in four circles during the auctions held in 2010.
Under the current deal, Bharti will buy out Qualcomm’s local partners Tulip Telecom Ltd and Global Holding Corp. It will acquire an additional 23 per cent stake through purchase of fresh shares in Qualcomm’s India entities.
The US company 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 acquires 100 per cent stake in the venture in 2014.
