The consolidation in the telecom sector begins: India’s largest mobile operator Bharti Airtel has announced that it has inked a strategic agreement to acquire the operations of Mumbai-based Loop Mobile.
Airtel says this deal will allow them to create Mumbai’s largest mobile network, with combined user base of 7 million connections in the region – 4 million with Airtel and 3 million with Loop Mobile. Although, note that this agreement is subject to regulatory and statutory approvals and Airtel mentions the integration is expected to happen once the definitive agreements are signed.
The deal also proposes integration of Loop Mobile’s 2500+ 2G sites with Airtel’s existing 2G and 3G network of 4000 cell sites across Mumbai. The financial terms of the deal were however not disclosed, although an ET report pegs the deal to be worth Rs 700 crore.
Vodafone Still Leads in Terms of Active Subscribers
As per the latest TRAI numbers, Airtel has a total 4.27 million connections in Mumbai while Loop Mobile has a total 2.98 million connections in Mumbai, making it a combined 7.25 million connections in Mumbai as of December 2013. This is ahead of Vodafone’s 7.02 million connections in Mumbai for the month.
However, what’s worth noting is Loop Mobile has the lowest percentage of active connections amongst all telcos in Mumbai circle: only 47.39% as of December 2013. In comparison, 92.6% of Airtel’s connections were active in Mumbai for December 2013, while 89.77% of Vodafone’s connections were active in Mumbai for the month.
Therefore, the total active base of the combined Airtel and Loop entity is still about one million short than Vodafone’s 6.3 million active base in Mumbai for December 2013.
A Way Out For Loop Subscribers?
The deal is being positioned as a way out for Loop Mobile subscribers, since Loop Mobile’s license in the 900MHz is expiring in September 2014 and the telco chose to not participate in the recently concluded 2G auctions, saying that it is entitled for a 10 year extension in Mumbai circle as per the license agreement. Airtel says the agreement will ensure service continuity to Loop Mobile’s subscribers, provide access to Airtel’s various products like 3G, 4G, Airtel Money, VAS and domestic/international roaming facilities among others and offer an exclusive retail reach of 220 outlets.
This deal has been doing the rounds since September 2013, with reports suggesting that Airtel was the frontrunner to acquire Loop Mobile since Loop owners Khaitan group were looking to exit the telecom sector. There were also talks of similar discussions with Aircel, Idea Cellular and Norway’s Telenor, which Loop Mobile had later denied.
Its worth noting that Loop Mobile’s sister company Loop Telecom had shut down its operations in May 2012, after its licenses were cancelled by the Supreme Court in February 2012.
Updates: Added information on Airtel, Loop and Vodafone’s active base. Added table.