Airtel dumps Rs700 crore Loop Mobile deal as DoT sits on proposal
05 Nov 2014
Telecom major Bharti Airtel has pulled out of a Rs700-crore deal to acquire the business and assets of Loop Mobile, a Mumbai-based telecom service provider, as the Department of Telecom (DoT) failed to clear the deal eight months after the two companies sought regulatory approval for the deal in March.
The DoT is yet to give clearance to the deal as it estimates that Loop Mobile and its sister concern Loop Telecom owe about Rs808 crore in spectrum and other charges to the government.
However, Loop Mobile's permit in Mumbai will expire on 29 November as the company did not purchase spectrum in the February auction, which was mandatory for continuing its operations.
Bharti Airtel had planned to buy Loop's assets in February, hoping to add its 1.7 million subscribers to Airtel's over 4.0 million subscribers in Mumbai, but the DoT wanted customers to be taken off the deal and ported separately.
Amidst uncertainty over the deal, Loop's customers ported out themselves, benefiting mostly Vodafone.
Now, with Airtel abandoning the deal, Loop Mobile subscribers are left in the lurch as Loop Mobile will not also be able to allow migration of its subscribers to Airtel as originally envisaged.
Under the deal, Loop Mobile's three million subscribers (at that time) in Mumbai were supposed to join Airtel's over four million subscribers, making it largest network in Mumbai.
A spokesperson for Loop Mobile said the company and Bharti had sought DoT's approval for the deal in March 2014, but the approval for the transaction from respective authorities is still awaited.
Airtel's withdrawal from the proposed transaction is causing huge loss to the company, the spokesperson added.
Private sector lender Axis Bank, meanwhile, told the DoT that its Rs215-crore loan to Loop Mobile will be at risk if the deal of the Mumbai-based operator to sell its assets to Bharti Airtel is not approved.
A consortium led by Axis Bank had given advanced loans of Rs350 crore to Loop Mobile and the current outstanding stood at Rs215 crore, according to a communication by the bank to DoT.
Loop Mobile has applied to Telecom Regulatory Authority of India (Trai) for release of additional porting codes for facilitating port-out of all its subscribers.