Indian mobile service provider Bharti Airtel is likely to announce its Rs 700 crore deal with Loop Telecom to expand its presence in the Mumbai circle – in a couple of days.
The M&A discussion between Sunil Bharti Mittal-promoted Bharti Airtel, the #1 telecom operator in India and Khaitans-owned Loop Telecom has been on for some time.
The deal will be primarily aimed at adding Loop Telecom’s 3 million-plus customers and its telecom infrastructure.
Also read: Bharti Airtel in talks to acquire Loop Mobile
The exit of Loop Telecom from the Indian communications market will be leveraged by Airtel. Loop did not participate in the recent spectrum auction which assisted the telecom ministry headed by Kapil Sibal to generate bids worth more than 60,000 crore.
Times of India today reported that the deal will indicate the strong willingness of telecom operators for consolidation in India.
Telecom operators such as Videocon Telecom, which did not participate in spectrum auction, the Maxis-owned Aircel, which spent very small amount, Uninor, which invested around Rs 800 crore during the auction, the loss making Tata Teleservices and MTS India, which is waiting for 800MHz band, are the ideal wireless operators for M&A.
Vodafone and Bharti Airtel are ready to take M&A route for expansion in India, which has around 850 mobile subscribers. The rural market is still untapped and there is huge opportunity in 3G and LTE to be tapped.
By buying Loop Telecom, Airtel, which grew in India through several M&A deals in the initial phase of its journey, will benefit from Loop’s over 3 million customers in Mumbai metro and telecom infrastructure. Loop has about 2,000 operational mobile tower sites, of which 500 are company-owned.
It is believed that Loop has high ARPU customers in Mumbai.
Also read: Indian telecom operator revenue in September 2013 quarter
TRAI data suggests that Loop Telecom has generated average gross revenues of Rs 113 crore in the September quarter of fiscal 2013-14.
According to TRAI, Loop Mobile had 0.34 percent market share in India in November 2013 against Airtel’s 22.31 percent share.
Also read: India telecom: mobile service provider market share in 2013 November
Bharti had about 4 million customers in Mumbai in November. Acquisition of Loop will increase its customer base to over 7 million. Vodafone with 6.9 million customers (as of November) is currently the biggest operator in the city.
There’s no official confirmation from both Loop and Airtel.
The deal indicates the exit of Loop brand from Mumbai.
