Frustrated Airtel snaps Loop deal
NEW DELHI: Disappointed at the lack of clearance to its bid to acquire the assets of Mumbai-based telecom operator Loop Telecom, Bharti Airtel pulled out of the deal, just weeks before the ailing company’s licence ends. The development comes as a dampener for the highly fragmented Indian telecom sector which has been seeking consolidation, especially after the government came out with new M&A (mergers and acquisitions) norms earlier this year.
Loop Mobile, Mumbai’s oldest operator which is owned by the Dubai-based Khaitan family, had entered into an MoU with Bharti Airtel in February that entailed transfer of its business assets and liabilities in a Rs 700 crore transaction.
However, telecom regulator Trai and the Department of Telecom raised objection to the transaction on the grounds that it did not give a choice to nearly 3-million subscribers (1.7 million at present) of Loop Telecom to port out to an operator of their choice. The operators, who presented their case before DoT, failed to receive a nod for the deal. Bharti Airtel had been getting frustrated with the delay in clearance. Vodafone and Idea Cellular had started eating into Loop’s subscriber base while also disconnecting services due to non-payment of dues (highlighted by TOI in its reports in earlier editions.)
Bharti came out with a terse statement, signed by group general counsel and company secretary Mukesh Bhavnani. “Under the agreements executed with Loop Mobile, the transaction was conditional upon DoT approval which even as of today has not been received. In this regard we have been in discussions with Loop. Loop had late last evening sent us an email noting that DoT approvals had not yet been received and had also noted that it was way beyond the time envisaged for securing such approval. In light of this update and the fact that Loop’s mobile licence is to expire at the end of this month, we have decided to terminate the discussions with regard to the transaction for acquiring subscribers of Loop.” Surya Mahadevan, chief operating officer of Loop Mobile, also confirmed the development. “The approval for the transaction is still awaited from the relevant authorities, as a result of which Bharti Airtel has withdrawn from the proposed transaction, causing huge loss to the company. Therefore Loop Mobile will not be able to migrate its subscribers to Airtel as originally envisaged.”
Vodafone has already sent a notice to Loop for recovery of its dues while Idea is understood to have knocked on the doors of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) over the same matter.
Loop said that it is making attempts to aid the migration of its subscribers to other operators. “Loop Mobile has applied to Trai for release of additional porting codes (UPC) for facilitating port-out of all its subscribers. ” Mahadevan said.
