Bharti to buy Loop Mobile for Rs 700 cr

In the first telecom merger & acquisition (M&A) deal since the government finalised its policy on this, Bharti Airtel, the country's largest operator by subscriber base, is set to buy Loop Mobile for about Rs 700 crore. The Dubai-based Khaitan family, which owns a 99 per cent equity in Loop, is likely to announce the deal in a day or two.

Under the deal, besides subscribers, Bharti will take over the towers and other network assets of Loop.

The government has yet to formally announce its M&A guidelines for the sector, but the deal can go through even under existing norms. The deal is also coming within days of the government completing its 900-MHz and 1,800-MHz spectrum auction, in which telecom operators committed themselves to shelling out Rs 61,000 crore.

A spokesperson for Bharti Airtel declined to comment on the issue, while a Loop Mobile spokesperson could not be reached for comment.

Loop, which offers GSM services in only the Mumbai circle, has about 3.2 million subscribers and a blended average revenue per user (arpu) of over Rs 225 - much higher than the industry average of about Rs 100 and Bharti Airtel's arpu of Rs 195.

With about 4.1 million subscribers, Bharti had so far been lagging behind Vodafone (6.8 million) in user base in the Mumbai circle.

The addition of Loop's 3.2 million high-arpu customers will take Bharti's strength to 7.3 million - the largest in the circle. But the Sunil Mittal-controlled telco will not get any spectrum from the deal, as Loop's 20-year licence (900-MHz band) expires in November this year and the company did not participate in the recently-concluded auction. Loop has about 2,000 operational towers. Of these, Bharti will get control of the 500-odd that Loop owns.

As part of the deal, some of the other assets, such as network equipment, will also be sold. On the negative side, Loop's Rs 400-crore debt will be transferred to Bharti. Loop had earlier held talks with a few other investors, but the deal did not go through. The company was left with no choice except being sold off after the Telecom Disputes Settlement and Appellate Tribunal dismissed its plea for renewal of licence in Mumbai, just before the auction.