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November 14, 1997


Qualcomm to set up phone plant in India

Qualcomm International, a pioneer in the 'code division multiple access', or CDMA, technology, plans to set up a 500,000 units fixed wireless telephone manufacturing plant in India.

The Indian unit will be Qualcomm's second plant to be located outside the US. The first is in Brazil.

The Indian plant is expected to cost between $15 million and $25 million. The San Diego, California, based company is also exploring the possibility of
Qualcomm plant
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setting up a fixed wireless infrastructure - switches, base station equipment and radios - manufacturing facility.

The $2 billion company is also finalising investment plans to set up a software development centre and field engineering facility in India. The facility will provide human resource support to the company's R&D and engineering activities. The software and field engineering ventures may be located at either Bangalore or Pune.

Qualcomm will take a final decision on the location of the plant and whether to opt for a joint venture or a technology licensing agreement with a local partner only by the middle of next year, according to John Major, executive vice-president and head of infrastructure products, Qualcomm.

Major refused to comment on the local companies, which it is negotiating for a joint venture.

However, according to a senior executive with a telecom equipment maker in India, Qualcomm is in discussions with Indian Telephone Industries, the 100 per cent state-owned telecom switching and transmission equipment manufacturer, for a joint-venture deal.

Qualcomm was earlier negotiating with certain domestic vendors like Bharti Telecom and Tata Telecom for a joint venture deal. The discussions hinged on the equipment order both the companies were to place for their basic telecom projects.

The talks fell through after Bharti Telenet, the basic telecom licensee in Madhya Pradesh, placed orders with Motorola for CDMA-based wireless in local loop equipment and Tata Teleservices of Andhra Pradesh firmed up Nortel and Lucent as its most preferred vendors.

"Bharti (Telecom) wanted to include its Goa plant in the deal with Qualcomm, which it was not very keen on. Tata Telecom had good facilities but could not promise an equipment deal from its Andhra Pradesh company (a separate joint venture with Bell Canada and American International Group)," explained the telecom executive.

Qualcomm has a total capacity of some 7.2 million CDMA phones a year, which it plans to increase to meet demand from cellular operators in the US, Chile, China, Ukraine and Korea, and from fixed wireless companies in South America, India and other parts of the world.

The company makes 5.4 million handsets and about 1.8 million fixed wireless telephones a year.

It expects the Indian plant, which will mostly make its QCT series of fixed wireless telephones, to largely service the domestic market.

On concerns about low volumes in the Indian market, Major explained: "There will be some exports to regional markets. But I have no idea why India cannot support this." The Indian fixed wireless market is expected to grow to over 600,000 units annually in the coming years.

Essar job

Essar Commvision, the basic telecom licensee in Punjab is all set to conclude a deal for wireless in local loop equipment and wireless telephone terminals with Qualcomm International.

The deal is estimated to be between $60 million (Rs 2.18 billion) and $80 million (Rs 2.88 billion).

The commercial terms of the deal are expected to be finalised over the next two weeks. When concluded, the contract will be among the cheapest concluded for CDMA based WiLL systems worldwide. On an installed capacity of 200,000, the per-subscriber cost for the system falls between $300 (Rs 10,800) and $400 (Rs 14,400).

However, a letter of intent has not been placed on Qualcomm as yet. But the possibility of another vendor coming into the picture at the last moment is not ruled out. Chicago-based Motorola is reportedly running neck and neck with Qualcomm for the deal.

Essar Commvision plans to set up a Rs 36 billion telecom network in Punjab. The Punjab project is a 90:10 joint venture between the Essar group and Bell Atlantic. The Ruias are also finalising plans to hawk 10.15 per cent equity in Essar Commvision to US company GTE.

The Essar deal will be Qualcomm's first deal bagged in competition with other vendors in India.

- Compiled from the Indian media

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