The Department of Telecom (DoT) could hamper the Airtel-Loop merger after all, as it will soon start sending out notices to Loop Mobile’s subscribers to switch to another operator before the company’s permit expires in November.
Bharti Airtel and Loop Mobile had signed a definitive agreement in June 2014, where Airtel would acquire Loop Mobile’s subscribers and assets for a rumoured Rs 700 crore price tag. However, the government fears that with the acquisition it will lose a chunk of easy money from number portability. Currently, when a user voluntarily ports their number from one operator to another, they are charged Rs 19 out of which one percent goes to the government. The government does not want to lose this money, if it allows Airtel to assimilate Loop Mobile’s subscribers. Note that Loop Mobile, which operates solely in Mumbai has three million users and Airtel has around four million users in Mumbai alone. The merger could have made Airtel the largest operator in Mumbai in terms of subscriber base.
There are two ways of looking at the hindrance caused by DoT. Airtel might have valued Loop Mobile taking its subscriber base into consideration, apart from its 25,000 cell site, essentially making the offer much more expensive for Airtel. If you look from DoT’s point of view, it if offering Loop Mobile’s subscribers a choice to port out to any other operator. I was one of the Loop Mobile subscriber to port out to Vodafone as soon as the news hit my ears. Having said that, considering the situation, Airtel could easily do a revaluation of the company for acquisition just based on its remaining assets.
PS: Airtel and Vodafone has already begun calling Loop Mobile subscribers to port number to their network.