Bharti Airtel is the lead contender to acquire Mumbai operator Loop Mobile, according to various sources cited by the Times of India.
A report from the Indian publication claims that negotiations between Bharti Airtel (New Delhi, India) and Loop’s (Mumbai, India) current owners – Dubai-based IP Khaitan and family – have recently gathered momentum.
However, Bharti Airtel wants further clarity on the renewal fee for Loop’s license, which is due to expire in September 2014, before it begins discussions about the valuation of the business.
Loop claims it is eligible for a ten-year license extension and is pursuing legal action in this area, but Khaitan Holdings Group – which has been in control of the operator since 2005 – appears keen to exit the market without having to pay the license fee itself.
Bharti Airtel’s interest in the company is likely to have been stoked by its spectrum holdings in the 900MHz band – which is less costly to operate than higher frequencies – but authorities may decide to reclaim some of that spectrum, which would have a major impact on the valuation of Loop Mobile.
There is also some concern about regulations regarding mergers and acquisitions in the sector, which could represent a barrier to any deal.
Khaitan Holdings Group has been in control of Loop Mobile since 2005 but is recently reported to have held discussions with a number of parties about a sale of the asset, with Idea Cellular (Mumbai, India) cited as a potential rival to Bharti Airtel.
The operator served more than three million customers at the end of July and reported average revenue per user that is among the highest in India.