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Airtel calls off Loop Mobile deal after it fails to get DoT approval

Airtel Loop

Bharti Airtel has called off its Rs 700 crore deal to acquire the assets of Mumbai-based Loop Mobile after failing to secure requisite approvals from the Department of Telecommunications (DoT), the company has informed BSE

Airtel mentioned that it terminated this deal keeping in mind that Loop’s license is expiring by the end of this month and after Loop informed them on Wednesday evening that it is yet to receive the requisite DoT approvals.

Following this, Loop Mobile COO Surya Mahadevan told Mint that it was too late for them to negotiate with other operators and they would now be shutting down operations on November 29, requesting its remaining subscribers to switch to a rival operator. Loop had around 1.18 million active connections as per the latest TRAI numbers.

TRAI permission to generate special MNP codes: Mahadevan mentions that they have currently sought permission from TRAI to generate special porting codes to enable their customers port out to other networks by November 29.

In addition, Loop will also be crediting deposits from their postpaid customers by crediting them to the customer’s last bill and refunding the remaining amount in 2-3 weeks.

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Airtel Loop deal timeline

Februrary 2014: Airtel first announced plans of acquiring the assets of Loop Mobile in February this year. The company had then mentioned that this deal will allow them to create Mumbai’s largest mobile network, with combined user base of 7 million connections in the region.

The deal was expected to be a way out for Loop Mobile subscribers, considering that Loop Mobile’s license was expected to end later this month and the telco chose to not participate in the February 2014 2G auctions.

Besides this, the deal had also proposed the integration of Loop Mobile’s more than 2500 2G sites with Airtel’s existing 2G & 3G network of 4000 cell sites across Mumbai.

May 2014: ZTE files a case against Loop Mobile in Mumbai High Court citing unpaid dues of $25 million. It had reportedly requested the court to put such a deal on hold till their dues were cleared.

June 2014: Airtel signs a definitive agreement to acquire Loop Mobile’s operations, four months after the initial announcement.

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July 2014: TRAI reportedly raises concerns over Loop Mobile transferring its subscribers to Airtel, alleging that customers should be given an option on which operator they intend to port as per the existing MNP rules. It also mentioned that the government will lose a substantial amount of porting fee through this deal. These concerns were also reportedly raised by a senior DoT official in September this year.

Oct 1, 2014: TRAI directs (pdf) Loop Mobile to inform its subscribers about the shutdown of its operations either in writing or by sending an SMS or an e-mail.

Meanwhile, Rival operators like Vodafone India make use of the delay in the approval of this acquisition to poach customers from Loop Mobile. Mint reports that the Vodafone ran a campaign to offer MNP to Loop Mobile customers at their doorstep.

Citing industry MNP data, a senior Vodafone official also told the publication that more than 45% of Loop Mobile subscribers had ported to Vodafone.

October 15, 2014: Loop Mobile offers to limit this deal to just a transfer of its subscribers, in a bid to get faster approval from DoT and salvage the Airtel deal.

October 25, 2014: Rival telecom operators block text messages from Loop Mobile over unpaid interconnect charges. These include Idea Cellular and BSNL

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Nov 1, 2014: Bharti Airtel calls off its deal with Loop Mobile.

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