Bharti Airtel may soon take ownership of Loop Mobile. The current owners have been searching for a strong buyer and the telecom company Loop Mobile has been close to shuttering its operations in the past. Owing to volatility in the Policies and other factors like the high license fees, it has become increasingly difficult for relatively smaller companies to sustain operations.
Airtel may be one of the largest telecom player in India but in Mumbai the core market of Loop Mobile, still eludes the top spot for the company. Loop Mobile’s customers, despite the opportunity to shift to other service providers using the Mobile Number Portability (MNP) route, have some way stayed devoted. The current subscriber strength of Loop Mobile in the Mumbai region alone is more than 3 million. When Airtel absorbs these customers, it will surely gain the leadership position in the financial capital of the country which presently has one of the highest teledensities.
However, there is another reason, why Airtel is particularly interested in Loop Mobile. The latter owns a small but crucial slice (8MHz) of the 900MHz band. Though Airtel still operates in the decades old 1800MHz frequency band, 900MHz band is certainly a lot more efficient. The 900MHz band allows the company to deploy a lot lesser number of Cellphone Towers. This significantly impacts operational costs in the short as well as long run. All this combined, simply means Loop Mobile’s customers offer a much better return, commonly referred to as ARPU
This is apparently where the deal has come to a temporary standstill. Loop Mobile just has under a year left for its license to expire. There is still uncertainty as to how the Government will dole out the optional 10 Year extension and what it will charge for the same. Additionally, the Government may decide to take back some of the lucrative spectrum from the 900MHz band and swap it with 1800MHz and this might severely diminish the preferential appeal of Loop Mobile for Airtel.