Anil Ambani Rejects Qualcomm’s Offer

NEW DELHI: Reliance Communications Chairman, Anil Ambani, has refused to accept the volume-based discount proposal that was pitched by the top brass of US-based Qualcomm which has led to the failure of talks between the two companies.

Ambani has asked Qualcomm’s global CEO, Paul Jacobs, to come up with a “transparent and upfront” handset price reduction model as the volume discount on handset sales was not perceived to be very transparent.

It has also been reported that volume discount on handset sales hinted at Qualcomm sharing marketing, advertising and other promotional costs with the service providers in lieu of promotion of CDMA technology, which is not acceptable to RCL.
RCL and Tata Tele services have both asked Qualcomm to reduce the 7% royalty on handsets sold in India. But Qualcomm says that it cannot lower royalty rate since it was below 5%.

Jacobs had said that on a $ 40 handset the company got to retain only $ 2 and it cannot lower that any further.

He said, “If we cut that royalty rate even in half, it’s only a dollar as compared to what we did by creating competition and got handset prices down by 25 percent.”

However, the Qualcomm CEO also mentioned that he was prepared to work with the Indian government and CDMA operators to bring down handset prices.