Bharti Airtel To Acquire Loop Mobile For Rs.700 Crore

(Before It's News)

India’s leading Telecom Service Provider Bharti Airtel is all set to buy a relatively smaller player, Loop Mobile.

Six months after contemplating the issue, Bharti Airtel has finally decided to acquire Loop Mobile for a round figure of Rs. 700 Crores (US$ 113 Million). As part of the deal, Airtel will not only get an immediate boost in subscriber addition, it will also gain hold of Towers and other Network Assets of the company. Currently Loop’s 99% owners, the Dubai based Khaitan Family is likely to make the formal announcement within two days.

At 3.2 Million subscribers, Loop Mobile may be a small player, but it is very important to Airtel. Loop is active only in Mumbai, but its Blended Average Revenue Per User (ARPU) is over Rs 225, which in turn is way above the industry average of Rs. 100 and higher than Airtel (Rs. 195) too. Loop Mobile’s customers are clearly spending a lot more on their Monthly Bill and that should help Airtel to boost its earnings.

However, besides the earning part, Airtel will also gain a strategic boost in terms of Subscriber Base. With 4.1 Million subscribers in Mumbai, Airtel was unable to secure a lead position in the City. Currently, with 6.8 Million subscribers Vodafone is the clear leader. But add the 3.2 Million Users and Airtel races ahead to the pole position.

Another interesting technical aspect of the deal is the inability of Airtel to secure a very lucrative piece of spectrum that Loop Mobile has within its control. Moreover, Loop’s Rs. 400 Crores Debt will now be added to Airtel’s Accounts.

Airtel is certainly a large telecom player and neither the acquisition, nor the debt amount can make a noticeable dent in the company’s finances. However, it will be interesting to see what Airtel does to retain Loop’s subscribers now that MNP is gaining acceptance. What do you think?

Source | afaqs

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