Airtel may soon announce Loop Mobile acquisition: Report

Sources privy to the negotiations said Sunil Bharti Mittal-led Airtel has almost completed talks withLoop Mobile, and the announcement will come in a couple of days.

The deal is likely to be finalised for about Rs. 700 crores, they added. Loop Mobile has a debt of Rs. 400 crores, which is likely to be included in the final transaction.

When contacted, Loop Mobile, which operates in Mumbai service area only and had over 3 million subscribers as on November, declined to comment. An Airtel spokesperson also refused offer comments.

This buyout could be the first deal that marks an industry gearing for consolidation. Though government is about to announce new M&A guidelines, the deal can go through even under the existing rules.

Loop's licence is expiring in the last quarter of 2014. As per present rules, Loop, which holds 8MHz of airwave frequency in 900MHz band, was required to participate in the auction that concluded on February 13 to win back its spectrum for continuing operations.

The company, however, did not participate in the auction.

On the other hand, Airtel participated in the auctions and bought premium 900MHz spectrum in Mumbai service area for about Rs. 2,800 crores. This amount is 70 percent premium over the base price.

As per Sebi data, the telecom major had about 4 million customers in Mumbai in November. If it acquires Loop Mobile, it will have total customer base over 7 million. Vodafone with 6.9 million customers (as of November) is the biggest operator in Mumbai at present.

Sources said Loop is in talks to sell both its mobile and tower business. Loop has about 2,000 operational mobile tower sites, of which 500 are company-owned.