In what will be India’s first consolidation move in almost six years, Bharti Airtel has agreed to acquire much smaller rival Loop Mobile. The deal is subject to regulatory and statutory approvals, Bharti said.
The deal value has not been disclosed but…
In what will be India’s first consolidation move in almost six years, Bharti Airtel has agreed to acquire much smaller rival Loop Mobile. The deal is subject to regulatory and statutory approvals, Bharti said.
The deal value has not been disclosed but reports suggested yesterday it would be around the Rs7bn (US$113m) mark, which includes Rs3bn worth of equity while the rest is debt.
The transaction will allow giant Bharti to strengthen its presence in Mumbai, where it already has four million subscribers.
In a 13 companies-strong mobile market, Loop has struggled to remain profitable. However, the Khaitan Holdings-owned operator has around three million high-paying subscribers in Mumbai, and therefore generates strong ARPU.
Sachin Gupta, an analyst with Nomura, believes that the transaction will be positive given that “consolidation is generally good for the industry and Bharti will be gaining a strong presence in a key market; and it is good to see more capital being spent on the domestic business, rather than seeking external growth – there is plenty of room for voice/data growth in India”.
Asked whether such a transaction could pave the way for other similar deals, a separate India-based analyst expressed doubts. Given the scarcity of similar assets, he said a consolidation wave in the industry was unlikely.
Instead, M&A activity would continue to be opportunistic, he told TelecomFinance.
Bharti recently spent around US$3bn to acquire 900 MHz and 1,800 MHz frequencies during the country’s latest spectrum auction.
Loop did not take part in this recent process and will therefore lose its 900 MHz licence in Mumbai after failing to renew it. The minnow had to stop providing mobile services outside of Mumbai in 2012 after its 2G licences were cancelled because of irregularities in their attribution in 2008. Several other operators were affected.
