Qualcomm To Buy U.K. Handset Co.

By Lynnette Luna

Published in RCR, February 28, 2000

Qualcomm Inc. is putting a financial stake in the ground to push CDMA technology in Europe. Sources close to the company say it will soon announce plans to acquire U.K.-based Tellit Communications Ltd., a cellular handset design and manufacturing company with expertise in Nordic Mobile Telephone 450 technology. The purchase price is around $20 million, sources say. Qualcomm declined to comment on the purchase.

''We continue to seek partners whose core skills and businesses are complementary to ours and who are best able to help in the development of the CDMA market,'' said Qualcomm spokeswoman Christine Trimble.

The Code Division Multiple Access community hopes the NMT 450 market will pave the way for the technology's first introduction in Europe, where regulators have mandated GSM technology in the 900 MHz and 1800 MHz bands. The NMT MOU voted late last year to accept both Global System for Mobile communications and CDMA technologies as migration paths from their analog networks.

Qualcomm and Lucent Technologies Inc. told the NMT community they are committed to making CDMA equipment for the 450 MHz band. But Qualcomm may be precluded from manufacturing handsets since it sold its handset business to Kyocera Corp. Its agreement with Kyocera allows Qualcomm to design and develop handsets, but not to manufacture them.

Qualcomm is likely to design the handsets and manufacture chipsets and software, selling them to other manufacturers interested in building CDMA handsets for this market. It kept a number of consumer product employees that will work on a contract basis in assisting Kyocera's CDMA handset business.

It's unclear what handset manufacturers may be interested in pursuing this market with CDMA technology. L.M. Ericsson and Nokia Oy - the primary NMT 450 network suppliers throughout Europe - have said they support the European Telecommunications Standards Institute's work on a global standard for GSM technology in the 450 MHz band.

Nokia Mobile Phones, however, has said it will evaluate making CDMA handsets if operators choose this technology. Nokia has yet to purchase any chipsets or components from Qualcomm for its current generation of CDMA handsets.

Eastern European NMT 450 operators are seen as the most likely candidates for CDMA technology. Westel Radio Telephone Ltd. in Hungary and Romania's TeleMobile have voiced their interest in the technology. These operators, who are experiencing strong growth, want to differentiate their services from GSM technology.

While GSM technology is the mandated standard in Europe, NMT 450 operators are in a unique position because they don't fall under the auspices of ETSI, and the European Union doesn't have control over industry actions in Eastern Europe. NMT operators historically have created their own analog standards.

However, some NMT 450 operators never received permission from their telecommunications ministries to migrate to digital technology. They will have to convince regulatory bodies to allow them to migrate to digital service and hope the ministry doesn't mandate a certain technology. Tellit is heavily entrenched in the NMT 450 market, having recently introduced a feature-rich analog NMT handset, which is gaining strong interest from operators. It was the first company to design a cellular handset based on new Low Emission Mobile Station technology.