Bharti Airtel buys Loop assets for Rs 700 cr

Bharti Airtel, India’s largest mobile operator by subscriber base, on Tuesday said it had entered into a strategic agreement with Loop Mobile to acquire Loop’s subscribers, as well as some of its assets, for about Rs 700 crore. The deal is subject to regulatory approvals.

The Dubai-based Khaitan family owns 99 per cent stake in Loop Mobile, which operates only in the Mumbai circle.

As part of the deal, Bharti Airtel will get about 3.2 million subscribers of Loop Mobile, its retail outlets and 400-500 of its cellular towers. This is the first deal to be recorded since the government finalised the new mergers and acquisitions (M&A) policy earlier this year (the policy is yet to be notified formally).

SEALING THE DEAL

• The Dubai-based Khaitan family owns 99 per cent stake in Loop Mobile, which operates only in the Mumbai circle
• At 4.1 million, Bharti’s user base in the Mumbai circle lags Vodafone’s (6.8 million)
• This is the first deal to be recorded since the government finalised the new M&A policy earlier this year
• Loop’s blended average revenue per user is about Rs 225, against the sector average of about Rs 100 and Bharti Airtel’s ARPU of Rs 195

At 4.1 million, Bharti’s user base in the Mumbai circle lags Vodafone’s (6.8 million) in the Mumbai circle. The addition of Loop’s high- average revenue per user (ARPU) customers will raise Bharti’s user base in Mumbai to 7.3 million, the highest in the circle.

Sources said Loop had debt of about Rs 400 crore, which the Khaitans would have to pay on their own.

Loop’s blended ARPU is about Rs 225, against the sector average of about Rs 100 and Bharti Airtel’s ARPU of Rs 195.

The deal will not provide any spectrum to Bharti Airtel, as Loop’s 20-year licence (900-MHz band) expires in November this year. The company did not participate in the recent spectrum auctions.

Separate statements by Bharti Airtel and Loop Mobile said the proposed transaction would bring together Loop Mobile’s 2G/EDGE-enabled network, supported by about 2,500 cell sites, and Airtel’s 2G and 3G networks, which were supported by about 4,000 cell sites across Mumbai. It would also enable subscribers access to 220 retail outlets.

The deal comes within days of the government completing 900-MHz and 1,800-MHz spectrum auctions, in which operators committed to spending Rs 61,000 crore to secure bandwidth. During the auctions, Bharti Airtel acquired five MHz of 900-MHz spectrum in Mumbai for Rs 2,800 crore, at a premium of about 70 per cent compared to the reserve price, and six MHz of 1,800-Mhz spectrum for Rs 1,600 crore.

Earlier, Loop had held talks with investors, but the discussions did not materialise. Just before the recent auctions, the Telecom Disputes Settlement and Appellate Tribunal had dismissed its plea for renewal of licence in Mumbai.

Bharti Airtel has about 289 million subscribers in 20 countries.