)
The Dubai-based Khaitan family, which owns a 99 per cent stake in Loop Mobile, is in talks with Bharti Airtel and two private equity funds to sell its business.
Loop, which runs GSM mobile services in Mumbai, is not in talks with Vodafone because under the mergers and acquisition norms the two would own more than 25 per cent of the 900-MHz spectrum in the Mumbai circle. This is not allowed under the rules.
Loop Mobile with 3.2 million customers had on Wednesday decided not to bid for the auction of spectrum in the 900-Mhz band. Notably, its licence to operate services in Mumbai ends in November this year.
The company had said on Wednesday that it had communicated to the department of telecommunications that it had already filed a suit in the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for extension of the licence after the November deadline, and non participation does not mean relinquishment of rights over the spectrum.
According to sources, the valuation of the sale has not been decided as it would depend on the fate of the TDSAT case. If Loop Mobile wins the case, it can ask for a higher valuation as it would, then, retain the licence as well as the spectrum but at the market price. In that case, it could bring in private equity funds to put in some money and run the company. It could also sell it to a strategic buyer.
However, if it does not win the case and has to give back the spectrum with its licence cancelled, then it will get value only for its network equipment , towers and transfer of subscribers. That might fetch a lower value for the company.
Analysts following the deal say the value of the transaction could be to the tune of Rs 750 crore. A Loop Mobile spokesperson declined to comment on the issue. So did Bharti Airtel.
With a blended ARPU of between Rs 225-260 , Loop Mobile has some of the top line subscribers much higher than the industry average ARPU of only Rs 95 which makes it an attractive preposition for any buyer.
