Mumbai's oldest mobile operator Loop Mobile is in talks with Bharti Airtel for possible merger, as Loop's main promotor Dubai based Khaitan Holdings Group looks to exit the telecom sector. Earlier Loop was in talks with Telenor, Aircel and Idea Cellular.
Loop Mobile, earlier known as BPL Mobile is serving the metro since 1995 and currently serves nearly 3 million subscribers with 4th spot. Loop generated a gross revenue of Rs 128 crore in quarter ended December 2012. But at the same time Loop, which enjoys highest ARPU in the circle & 30% postpaid customer base has only 44.36% active subscribers, which is second lowest in the market.
Loop Mobile's sister company Loop Telecom grabbed licenses in 21 circles in 2008, but all licenses were cancelled in February 2012 by Supreme Court verdict. Since then Loop is present only in one circle - Mumbai. The license of Mumbai is going to be expired on September 2014. Like Airtel, Vodafone and Idea Loop also filed a case against Government for 10 years license extension.
It's obvious that Airtel and Loop's merged entity will be the market leader in Mumbai with 30% market capture, but Airtel's main concern is to get Loop's 8MHz spectrum on 900MHz band which is more efficient than 1800MHz and helps to cut down capital expenditure. Though nothing was confirmed and no valuation is fixed, if Loop get the 10-year extension the valuation will definitely go up. But everything depend on when Govt. comes with M&A rules and regulation for telecom sector.