Moneycontrol Bureau
India's largest telecom operator Bharti Airtel acquired Loop Mobile that has mobile network only in Mumbai circle. With this acquisition, Bharti becomes the top operator with seven million subscribers followed by Vodafone with 6.8 million subscribers.
"India's a leading global telecommunications services provider with operations in 20 countries across Asia and Africa, and Loop Mobile today announced a strategic agreement for their operations in Mumbai (India) service area," Bharti said in its filing.
Under the agreement, Loop Mobile’s three million subscribers in Mumbai will join Airtel’s over four million subscribers, creating an unmatched mobile network in Mumbai.
Sources told CNBC-TV18 that the deal is valued at Rs 700 crore. Loop will use these sale proceeds for repaying debt of Rs 400 crore and the rest will go to promoters IP Khaitan and family, sources said. Hence, for Bharti, it becomes a debt-free company, sources added.
Bharti said the proposed transaction will bring together Loop Mobile’s 2G/EDGE enabled network supported by 2,500 plus cell sites, and Airtel’s 2G and 3G network supported by over 4000 cell sites across Mumbai.
New customers will get benefits of Airtel’s innovative product portfolio, and access to superior services, innovative products like 3G, 4G, Airtel Money, VAS and domestic/international roaming facilities.
Meanwhile, Loop Mobile's spectrum license in Mumbai circle will expire by September 2014 but that will not affect services due to this deal. The company did not participate in the spectrum auction for 1800 MHz and 900 MHz scheduled this month.
In that auction ended on February 13, Bharti Airtel has acquired 115.0 MHz spectrum for a total consideration of Rs 18,530 crore. "Bharti will make an upfront payment of Rs 5,425 crore, with the balance to be paid in ten annual instalments of Rs 1,310 crore each, commencing two years from now," the company said.
At 09:48 hours IST, the stock was down 0.18 percent to Rs 304.55 on the Bombay Stock Exchange. The stock has not seen any major reaction because of small acquisition.
Bharti Airtel has an enterprise value of Rs 1.94 lakh crore as against Loop buyout price of Rs 700 crore.
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