Bharti Airtel in talks to buy out Loop Mobile
17 Jan 2014
Bharti Airtel is in talks to buy out Mumbai-based Loop Mobile in a deal that would add about 3 million customers to Bharti's Mumbai customer portfolio.
Loop Mobile, owner of mobile telephony licence for the Mumbai circle, is conducting negotiations with Bharti Airtel and other telecom firms for sale of its business for Rs750 crore.
If a deal materialises, it would catapult the Suni Mittal-led Bharti to the biggest telco by subscribers in Mumbai.
Loop has debt of Rs400 crore, which is likely to be included in the final deal size.
Even as Loop Mobile and Bharti Airtel declined comment, media reports quoted sources privy to the negotiations that Loop was discussing the sale of both its mobile and tower business.
According to a PTI report, Loop Mobile holds 8MHz of spectrum in the premium 900 MHz band, which according to the latest base price, is worth Rs2,624 crore.
The operator owns around 2,000 operational mobile tower sites, of which, 500 are company-owned.
The report said some suitors are interested in only Loop's mobile business, but others could be interested in the combined entity. If Bharti Airtel were to buy the mobile business of Loop, the Khaitan-owned company would separately sell the tower business, commentators say.
With a successful deal the number of claimants for the premium 900 MHz band in the Mumbai service area would be reduced. At the end of September, Bharti Airtel had 4.1 million customers in Mumbai and was ranked third in terms of subscribers.
Loop, which runs GSM mobile services in Mumbai, is not in talks with Vodafone, as under the mergers and acquisition norms the two would own over 25 per cent of the 900-MHz spectrum in the Mumbai circle, which was not allowed under the rules, the report said.
Loop Mobile with 3.2 million customers, had on Wednesday, decided not to bid for the auction of spectrum in the 900-Mhz band. It may also be noted that its licence to operate services in Mumbai ended in November this year.
According to the company, it had communicated to the department of telecommunications of having filed a suit in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for extension of the licence after the November deadline, and non-participation did not mean relinquishment of rights over the spectrum.
The sources said, the valuation of the sale had not been decided as it would depend on the fate of the TDSAT case.
In the event of Loop Mobile wining the case, it could ask for a higher valuation as it would, then, retain the licence as also the spectrum, though at the market price.
According to commentators, in that case, it could tap private equity funds for investing some money and run the company.
