SAN DIEGO and MUMBAI -- January 10, 2002 -- Qualcomm Incorporated (Nasdaq: QCOM), pioneer and world leader of Code Division Multiple Access (CDMA) digital wireless technology, and Reliance Communications Limited (RCL), a company promoted by Reliance Industries Limited, India's largest private-sector enterprise, today announced a strategic alliance to support the introduction of next-generation CDMA wireless technology in India. As part of the alliance, Qualcomm has committed to invest up to US$200 million for a minority stake in the equity capital of RCL. RCL intends to provide basic telephone services, Wireless Local Loop (WLL) with limited mobility and national long distance services in India. RCL also proposes to enter into international long distance telephony once the sector is open to private companies.
RCL has acquired licenses for providing basic telephone services in 17 out of 21 circles in India. Including Gujarat, this covers approximately 95 percent of India's population. RCL proposes to provide limited mobility wireless services under these licenses by deploying advanced CDMA2000 1X technology during 2002.
To date, foreign telecom investors have been interested primarily in the cellular services sector and total foreign investment in the basic services sector has been limited to Rs. 8billion in the past seven years. The investment by Qualcomm in Reliance Communications Ltd. of Rs. 10billion is the largest investment in basic services in any single telecom services licensee company in India.
"With recent positive regulatory policy changes in India that allow the provision of limited mobility wireless services under a basic telephone license, CDMA is an attractive solution for Wireless Local Loop operators," said Jeff Jacobs, president of global development for Qualcomm. "Reliance's industry leadership and financial strength make it well positioned to deploy advanced voice and data wireless services nationwide. We look forward to working with them closely to make the implementation of CDMA technology a success."
"Availability and affordability of telecom services have been the key constraints that have led to a low teledensity in India. RCL plans to leverage the cost, capacity and quality advantages of CDMA to offer the most competitive wireless voice and data services nationwide to meet the availability and affordability needs of consumers in India," said Mr. Mukesh Ambani, vice chairman, Reliance Industries Limited. "In partnering with Qualcomm, RCL brings in the best and the latest available wireless technology for the benefit of Indian telecom users and this will make a significant contribution in realizing the objectives of the Government of India's New Telecom Policy."
A major objective of the Government of India's New Telecom Policy 1999 (NTP 99) is to increase rural teledensity from the current level of 0.4 to 4.0 percent by the year 2010 and provide reliable transmission media in all rural areas. CDMA technology is the best-suited network system for achieving this target within the prescribed time frame. CDMA technology enables rapid deployment of the services. CDMA WLL is advantageous in built-up, densely populated urban areas, where laying of cable is neither easy nor economically viable. Its usefulness is also felt in adverse terrain, and remote and rural areas where subscriber density is low.
The next-generation CDMA2000 1X technology represents a quantum jump from the current second-generation (2G) technologies offered by various operators in India. CDMA2000 1X would enable RCL to provide advanced, global wireless services to Indian consumers with improved voice quality, lower call drop rates, over the air activation facilities, and location-based and wireless Internet services. CDMA2000 1X provides a more capable, spectrally efficient, timely, lower cost path to next-generation services. CDMA2000 1X provides nearly double the voice capacity of 2G cdmaOne systems. The technology is superior not only in respect of voice capacity, but also in the case of data traffic. In contrast to the 9.6 kbps data speed available on GSM, CDMA2000 1X technology can transmit data up to 307 kbps. This high-speed data capability will result in the development of various applications in the field of productivity enhancement, lifestyle, information and entertainment on the mobile platform.
"CDMA2000 1X handsets are expected to be introduced in India. For the first time, Indian consumers will have the choice of wide-screen, color display, multi-feature rich handsets at attractive prices. India will rank among the technologically most advanced countries in this sector," said Mr. Mukesh Ambani. "Launch and absorption of CDMA technology in the Indian Communication Sector will put India at the cutting edge of mobile technology. Like India's IT personnel, who are greatly valued all over the world, our trained personnel will be much in demand in the field of 3G services abroad as a result of introduction of this technology in India."
CDMA2000 1X was first introduced in Korea in October 2000 and has approximately 3.5 million subscribers to date. Additional CDMA2000 1X launches are expected this year in several countries including the United States, Japan, Thailand, Australia and New Zealand. There are more than 100 million CDMA subscribers in 47 countries worldwide.
"The proposed alliance would ensure success of the next-generation CDMA2000 1X technology in India and reflects the confidence of Qualcomm in the ability of RCL to tap the large untapped demand potential in India," said Mr. Mukesh Ambani.
The Government of India's decision to open up the telecom services sector for private participation has ushered in a revolution in this field. Telecom users in the country are now enjoying the benefits of the Government's policy changes through the availability of the world's most advanced technology and services at affordable rates. With the introduction of high-quality, affordable limited mobility wireless services on a nationwide basis, RCL plans to contribute significantly to achieve the teledensity targets of 7% in 2005 and 15% in 2010, as outlined by the Government of India in its Telecom Policy Documents. Reliance Communications Limited plans to cover all major cities/towns in India in different circles and provide a bouquet of services. The focus will be on providing end-to-end integrated data and voice services to the Indian users in the next two to three years.
Reliance Group is India's largest business house with total revenues of US$12.5 billion, cash flow of over US$1.4 billion, net profit of over US$950 million and exports of US$2 billion. The Group has total assets of US$11.5 billion. The group's activities span petrochemicals, synthetic fibres, fibre intermediates, textiles, oil and gas, financial services, refining and marketing, power, insurance, telecom and infocom initiatives. Reliance emerged as India's Most Admired Business House in a Taylor Nelson Sofres - Mode (TNS-Mode) survey for 2001 conducted for Business Barons magazine, June 2001.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's business areas include CDMA chipsets and system software; technology licensing; the Binary Runtime Environment for Wireless™ (BREW™) applications platform; Eudora® e-mail software; digital cinema systems; and satellite-based systems including portions of the Globalstar™ system and wireless fleet management systems, OmniTRACS® and OmniExpress®. Qualcomm owns patents that are essential to all of the CDMA wireless telecommunications standards that have been adopted or proposed for adoption by standards-setting bodies worldwide. Qualcomm has licensed its essential CDMA patent portfolio to more than 100 telecommunications equipment manufacturers worldwide. Headquartered in San Diego, Calif., Qualcomm is included in theS&P500 Index and is a 2001 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Except for the historical information contained herein, this news release contains forward-looking statements (including but not limited to express or implied statements regarding the anticipated benefits to Qualcomm from the agreement with and investment in RCL, the speed in which the networks are deployed and the anticipated growth in the markets to be served) that are subject to risks and uncertainties, including the Company's ability to successfully design and have manufactured significant quantities of CDMA components on a timely and profitable basis, the extent and speed to which CDMA is deployed in the markets to be served, the extent and speed with which the companies Qualcomm has invested achieve profitability, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 30, 2001, and the most recent Form 10-Q.###