New Delhi: Telecom major Bharti Airtel on Wednesday called off a deal worth Rs 700 crore to acquire the business and assets of Mumbai-based Loop Mobile as the Department of Telecom (DoT) is yet to clear the transaction announced in February.
With this development, Loop Mobile will not be able to migrate its 17 lakh subscribers to Airtel as envisaged earlier.
Airtel in a filing to BSE said its proposed transaction related to Loop was conditional upon DoT approvals which had not been received till date.
"In light of this update and the fact that Loop's mobile license is to expire at the end of this month, we have decided to terminate the discussions with regard to the transaction for acquiring subscribers of Loop. A formal communication to this effect has been released to Loop at 05:19 PM today," Airtel said in a statement.
Khaitan group-promoted Loop Mobile suffered a setback when the Supreme Court cancelled the pan-India permit of its sister concern Loop Telecom as part of quashing 122 telecom licences in February 2012.
The apex court's order, however, did not apply to Loop Mobile's Mumbai licence that is expiring on November 29. The company also did not purchase spectrum in auction held in February this year which was mandatory for continuing its operations.
A Loop Mobile spokesperson told PTI, "Loop Mobile and Bharti applied to the DoT for approval of the business transfer in March 2014. The approval for the transaction is still awaited from the relevant authorities as a result of which Bharti Airtel has withdrawn from the proposed transaction causing huge loss to the company (Loop)."
DoT is yet to give clearance to the proposed deal as it estimates that Loop Mobile and its sister concern Loop Telecom owe about Rs 808 crore in spectrum and other charges to the government.
Private sector lender Axis Bank has also told the DoT that Rs 215-crore loan to Loop Mobile will be at risk if the deal of the Mumbai-based operator to sell its assets to Bharti Airtel is not approved.
Airtel had signed the deal with Loop in February this year to buy business and assets of Loop Mobile in Mumbai under a strategic agreement for about Rs 700 crore.
Under the agreement, Loop Mobile's 3 million subscribers (at that time) in Mumbai were supposed to join Airtel's over 4 million subscribers, which would have made it largest network in the metropolitan city.
Shares in Bharti Airtel, on Wednesday, ended at Rs 385.30 apiece on the BSE , down nearly 3 per cent from the previous close.
To a particular query by BSE on the fall in stock price, Airtel said it has complied with disclosure obligations and is "not aware of any information which could explain the movement in trading of shares as mentioned in the aforesaid email".
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