Loop/Airtel deal still in the air as user base shrinks to below half strength

29 Oct 2014

On the instruction of the Telecom Regulatory Authority of India (TRAI) Loop Mobile has issued a notice to its customers confirming that it will be deactivating its network on 29 November, but the cellco remains confident that the Department of Telecommunications (DoT) will approve its acquisition by Bharti Airtel within the week. In an interview with The Hindu Business Line, Loop’s Chief Operating Officer Surya Mahadevan noted: ‘Our expectation is that the DoT will approve the business transaction as proposed by us. In a week’s time, we will have 100% clarity on the DoT guidelines and the timeline for subscriber migration to Bharti Airtel.’ The deal was agreed in February this year but has yet to be green-lit by the watchdog. As previously noted by CommsUpdate, Loop offered to alter the terms of the deal earlier this month in an effort to speed up the approval process, but the DoT did not issue an official response. The sale is valued at an estimated INR7 billion (USD114.21 million) and is vital for Loop to pay off debts equating to roughly INR8.08 billion incurred largely by the closure of its subsidiary Loop Telecom in the wake of the mass cancellation of 2G licences in February 2012. The Loop official did not comment on how the telco would deal with its debt if the Bharti Airtel deal falls through.

For Airtel, however, the deal is fast losing its appeal. Airtel’s primary focus regarding the takeover is the acquisition of Loop’s Mumbai customer base, but since agreeing the deal Loop has shed more than half of its users. According to Mahadevan, the operator currently serves around 1.2 million-1.3 million, compared to nearly three million in March 2014.

India, Department of Telecommunications (DoT), Loop Mobile, Telecom Regulatory Authority of India (TRAI)