Bharti Airtel in talks to acquire Loop Mobile

Bharti Airtel is in talks to acquire Loop Mobile, a telecom operator in Mumbai, India.

Dubai-based IP Khaitan and family is looking at exiting from the telecom sector.

Loop Mobile was earlier promoted by BPL’s Rajeev Chandrashekhar.

Final decision on the Loop Mobile-Airtel deal will depend on clarity on guidelines governing mergers and acquisitions in the telecom sector and the renewal fee for Loop’s licence. Loop’s licence expires in September 2014, Economic Times reported.

Loop is the fourth largest telecom operator in Mumbai with over 3 million customers. Loop has generated a gross revenue of Rs 128 crore in quarter ended December 2012. ( Telecom operators based on gross revenue market share in Q3 FY 2013: TRAI )

This means both revenue and user base of Loop Mobile will not be the main attraction to Airtel.

Airtel-Loop deal

The billionaire Sunil Mittal promoted Bharti Airtel will benefit from Loop Mobile’s 8 MHz of spectrum in the 900 MHz frequency band. Both Bharti and Idea, in the Mumbai circle, have spectrum in the 1800 MHz band.

The 900 MHz frequency band is preferred by cellular companies as it is more efficient, in that a lesser number of cellphone towers are required, thus reducing capital spend.

The report says if Loop gets to retain its 900 MHz for another 10 years, then it will be a prized asset. However, the government may decide to take back a portion of that (spectrum) for the auction pool and swap it with 1800 MHz (frequency). This clarity is essential for the deal and the final valuation.

Nearly 30 percent of Loop’s subscribers are post-paid.

The acquisition of Loop will help Airtel become the leader in Mumbai in terms of number of subscribers, thus propelling it to the top slot in the key metros of Delhi and Mumbai.

At present, Vodafone is the market leader in the Mumbai metro with over 6.5 million customers, as per April 2013 data from COAI. Vodafone India’s revenue market share in Mumbai is 29 percent as on March 2013. ( Vodafone smart 3G Internet strategy revealed )

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