With Loop Mobile deal, Bharti Airtel pushing Vodafone from No.1 spot to No.2

                      

Bharti Airtel on Tuesday proposed to buy the services of Loop Mobile in the Mumbai service area.

Under the agreement, Loop Mobile's 3 million subscribers in Mumbai will join Airtel's over 4 million subscribers, "creating an unique mobile network" in Mumbai by the Airtel. This deal makes Airtel the country's largest service provider by subscribers, and pushes the Vodafone first spot which has 6.8 million subscribers.

The proposed procedure will bring together Loop Mobile's 2G enabled network supported by 2,500-plus cell sites, and Airtel's 2G and 3G networks supported by over 4,000 cell sites across Mumbai. The Airtel will also offer subscribers the largest exclusive retail reach with 220 outlets.

The companies did not revealed the size of the deal but industry sources saying that it could be for about Rs 700 crore. Loop, 99% owned by the Dubai-based Khaitan family, has a debt of around Rs 400 crore.

Loop Mobile subscribers will become part of Airtel's global network that serves over 289 million customers in 20 countries. By this Airtel is ranked the fourth largest mobile services provider in terms of subscribers.

For now Loop has services in only the Mumbai circle and gives a good average revenue per user of over Rs 225, much higher than the industry average of Rs 100 and Airtel's Arpu of Rs 195. Loop's portfolio includes post-paid subscribers in an industry which has over 90% of prepaid subscribers, potentially making it a good deal for Airtel to gain more subscribers.

Loop's licence comes up for renewal in November 2014. However, the company did not participate in the just-concluded spectrum auctions. But Airtel,brings the part of spectrum at the auctions.

The Airtel-Loop to be the first deal post for government's finalisation of the mergers and acquisitions (M&A) policy earlier this year.

Analysts said the deal may not trigger an M&A wave in the industry in the months to come. "For Bharti, it turns out to be an very good opportunistic transaction. The company wanted to become the No.1 service provider in Mumbai."Consolidation will happen but it will depend on the market requirement.