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Qualcomm Inc. ( QCOM - Analyst Report) sold an additional 2% stake in four entities of its Indian wireless broadband business to Bharti Airtel, for an undisclosed amount. This will further consolidate Bharti Airtel’s position – the leading telecom operator in India.
These four entities already own broadband wireless access (BWA) licenses in four major circles of Delhi, Mumbai, Haryana and Kerala. So, raising its stake in these units will help it to stay ahead of competitors like Relience Jio Infocomm, who are planning to start BWA services across Delhi and Mumbai. At present, Bharti Airtel owns BWA licenses for eight circles that include Kolkata, Karnataka, Punjab and Maharashtra.
Last year, Qualcomm entered into an agreement to sell 49% of its Indian broadband business to Bharti Airtel for nearly $165 million. Moreover, the company decided to exit the Indian wireless market by selling the remaining stake to Bharti Airtel by the end of 2014. However, the company will continue to offer its technological support to the Indian carrier.
In 2012, Qualcomm has spent nearly $1 billion to secure the spectrum licenses. However, Qualcomm has decided to disseminate the fourth generation super-fast wireless broadband service and then sell it to its local partners.
India is the second-largest telecom market in the world with a wireless subscriber base of nearly 1 billion but a broadband penetration of only 2%. The broadband sector is attracting huge investments to introduce LTE network in India.
Hence, we believe that forming a strategic relationship with India’s leading carrier will help Qualcomm to boost its Snapdragon chipset supply as Bharti Airtel will be using Snapdragon-based devices to support its 4GLTE revolution.
Currently, Qualcomm carries a Zacks Rank #3 (Hold). Other Stocks to Consider
Other stocks to consider in the semiconductor industry are Ericsson ( ERIC - Analyst Report) , Texas Instruments Inc. ( TXN - Analyst Report) and Broadcom Corp. . Both Texas Instruments and Broadcom carry a Zacks Rank #3 (Hold) while Ericsson holds a Zacks Rank #1 (Strong Buy).