September 22, 2011 / 1:32 PM / 8 years ago

India rejects Qualcomm Internet licence bid

NEW DELHI/MUMBAI (Reuters) - India’s telecoms ministry has rejected Qualcomm Inc’s application for a licence to provide Internet services, the U.S. chipmaker said on Thursday, casting uncertainty over its India plans after it paid $1 billion to buy broadband spectrum last year.

A Qualcomm sign is seen at one of Qualcomm's numerous buildings located on its San Diego Campus February 7, 2011. REUTERS/Mike Blake/Files

Qualcomm said the application was rejected on grounds that it found to be “baseless.” It did not give details and a company spokeswoman declined to comment beyond the official statement.

India’s telecoms ministry has cited Qualcomm missing the deadline for applying for the Internet service providers’ licence as one of the reasons for rejecting the application, two sources with knowledge of the matter told Reuters.

According to the broadband spectrum auction rules, firms that won wireless airwaves in last year’s auction were required to apply for the licence within three months of being declared winners, the sources said.

“I would imagine any company in this position could be expected to challenge something like this,” said Mahesh Uppal, director at telecom consulting firm Com First (India).

“Qualcomm was the only major global player that bid in the 3G (or) broadband auctions. If it were to be now denied a licence on flimsy grounds, it would send a very worrying signal to investors,” Uppal said.

Telecom companies spent a total $24 billion, far more than expected, in a state auction last year to buy radio airwaves for third-generation (3G) and broadband services, with most of it funded by debt.

Qualcomm said in a statement that it fully complied with the application process and it would work with the Indian authorities to resolve this matter.

The ministry’s move will delay the company’s plan to launch broadband wireless services in India, for which it had spent $1 billion buy wireless airwaves in Mumbai, New Delhi, Haryana and Kerala circles in an auction last year.

Qualcomm, which sold a 26 percent stake in its India broadband venture to Indian firms Global Holdings and Tulip Telecom for about $58 million last year, has said it seeks to eventually exit the business.

Qualcomm was expected to launch wireless broadband service this year after getting the Internet Service Providers’ licence from the telecommunications ministry.

The company’s were trading down 3.4 percent at $49.91 Thursday on Nasdaq at 1331 GMT.

Additional Reporting by Prashant Mehra; Editing by Aradhana Aravindan

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