The acquisition of Loop Mobile, Mumbai’s oldest telecom operator, would help Bharti Airtel emerge as the leading service provider in the metro. The New Delhi-based GSM operator would be number one on customer front and average revenue per user (ARPU).
Bharti Airtel is to acquire Loop Mobile, a single circle operator, for about ₹700 crore in a slump sale. The acquisition would include the GSM operator’s more than 3.2 million subscribers, telecom towers (a total of 2,000 of which about 500 are own), equipment and optic fibre among others.
According to sources, the companies are expected to announce the deal on Tuesday. When contacted a Loop Mobile spokesperson declined to comment.
“For Bharti Airtel, buying Loop Mobile makes a strategic sense. On the subscriber front, Vodafone India is the leader in the Mumbai circle and if Airtel acquires the company, it would become the top company on user count,” Ankita Somani, sector analyst at Angel Broking said.
As of December end, Vodafone India has more than seven million users, Airtel with 4.3 million and Loop Mobile with 3.2 million. The additional 3.2 million subscribers would make the company the leader in Mumbai, Somani added.
“Another benefit for Airtel is the high ARPU customers Loop Mobile has, and importantly a majority of the users are post-paid subscribers,” said a Mumbai-based analyst, who declined to be named. According to industry data, Vodafone’s ARPU for July-September quarter was at ₹274 and that of Bharti Airtel at ₹167, while that of Loop Mobile stood about ₹200.
“Considering the cost of acquisition, this would be negative in the short-term for Bharti Airtel as the funds have to be raised through debts,” said Kishor P. Ostwal, Chairman and Managing Director at brokerage firm CNI Research.
All the analysts contacted said they were not aware if the companies were close to a deal as reported.