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Airtel signs definitive agreement to buy Loop Mobile

Airtel LoopBharti Airtel Ltd has informed BSE that it has signed a definitive agreement with Loop Mobile (India) Limited, after announcing its plans to acquire the Mumbai-based company in February this year.

Airtel has not stated if it’ll retain all the employees of Loop Mobile or only the infrastructure and customers the telco has. It had then said that the deal would 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. Airtel had earlier mentioned that the integration will happen once the definitive agreements are signed.

However, ZTE has filed a case against Loop Mobile citing unpaid dues totalling to $25 million. It has approached a court in Mumbai seeking interim measure of protection for securing the outstanding amount. ZTE told the court that it was not informed about the sale to Airtel and requested the court to put such a deal on hold till their dues were cleared.

The Airtel-Loop deal 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.

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.

It’s 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.

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