Done deal: Bharti Airtel top telecom operator in Mumbai after Loop Mobile buyout Bharti Airtel, which bought 900 MHz band spectrum in Mumbai in the just-concluded auction, today announced that it has bought out Loop Mobile -- a deal that will make the telecom major the top operator in the city with over seven million customers. Loops subscribers will thus continue to get uninterrupted services despite the companys licence expiring in September. Indias a leading global telecommunications services provider with operations in 20 countries across Asia and Africa, and Loop Mobile today announced a strategic agreement for their operations in Mumbai (India) service area, Bharti said in its filing. The deal has been finalised for about Rs 700 crore, CNBC-TV18 reported. CNBC-TV18 was the first to break this story over the weekend. Loop Mobile has a debt of Rs 400 crore. Bharti Airtel already has around Rs 60,000 crore of debt on its books. Following the announcement, shares of Bharti Airtel fell 0.5 percent to Rs 303 on the BSE. According to CNBC-TV18, Loop will use Rs 400 crore of the proceeds to repay debt and the remaining Rs 300 crore will go to the promoters. Airtel has refused to comment on the deal. The purchase has enabled Bharti to surpass Mumbai market leader Vodafone by customer numbers, although not by revenue. Mumbai is one of the biggest cellphone markets in India. Loop, which operates in Mumbai service area only has over 3 million subscribers. The deal will be the first consolidation move in the countrys telecom industry since 2008, taking Indias biggest operator to the top spot in Mumbai. The deal looks attractive but it is a small acquisition for Bharti. It is incremental positive for the company, said Elara Capitals Harindra Kumar on CNBC-TV18. Basically, post the deal Bharti Airtel would be number one on customer front and average revenue per user (ARPU). Apart from the 3.1 million subscribers, Bharti would also acquire Loops telecom towers, equipment and optic fibre among others. Another benefit for Airtel is the high ARPU customers Loop Mobile has, and importantly a majority of the users are post-paid subscribers This buyout could be the first deal at a time when industry is gearing for consolidation. Though government is about to announce new M&A guidelines, the deal can go through even under the existing rules. Loops licence is expiring in the last quarter of this year. As per present rules, Loop which holds 8 mhz of airwave frequency in 900mhz band was required to participate in auction that concluded on February 13 to win back its spectrum for continuing operations. The company, however, did not participate in the auction. On the other hand, Airtel participated in the auctions and bought premium 900mhz spectrum in Mumbai service area for about Rs 2,800 crore. This amount is 70 per cent premium over the base price. As per Sebi data, the telecom major had about 4 million customers in November. If it acquires Loop, it will have total customer base over 7 million. Vodafone with 6.9 million customers (as of November) is the biggest operator in the city at present. Sources said Loop is in talks to sell both its mobile and tower business. Loop has about 2,000 operational mobile tower sites, of which 500 are company-owned. Loop was an old player with a base of higher-paying customers in a key market, so the deal is attractive for the acquirer, said Rikesh Parikh, vice president for equities at Motilal Oswal Securities.
Posted on: Tue, 18 Feb 2014 05:20:00 +0000
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