Bharti Airtel emerges as frontrunner to acquire Loop Mobile

[mmadhankumar]

Bharti Airtel has emerged the frontrunner to acquire Loop Mobile, one of Mumbai's oldest cellular networks, as the company's owners, Dubaibased IP Khaitan and family, seek to exit the telecom sector, said multiple sources aware of the negotiations.

Discussions with Airtel have been going on for some time and have gathered momentum in recent weeks. But a final deal is dependent on clarity on guidelines governing mergers and acquisitions in the telecom sector and the renewal fee for Loop's licence, before discussions begin on the valuation and other commercial terms. Loop's licence expires in September 2014.

Loop, the fourth-largest operator in Mumbai, started operations in 1995 as BPL Mobile. In 2005, Khaitan Holdings Group took ownership control of the company. Loop has over 3 million customers as per July subscriber numbers.

What is, however, of strategic interest to likely buyers including Bharti is the 8 MHz of spectrum in the 900 MHz frequency band that Loop operates in. 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.

Loop's subscribers have stayed on despite number portability — which allows them to switch to another operator while retaining their phone number — and the company generates among the highest average revenue per user (ARPU) per month. Nearly 30% of its subscribers are post-paid, and spend more per month. Comparable figures for Airtel in Mumbai are not available, but the number is likely to be much lower.

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.

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