India's Aircel Reported to Be in Talks to Buy Loop Mobile

India's Aircel Cellular is reported to be in talks to buy Mumbai based Loop Mobile (formerly BPL Mobile), which is owned by the Ruias of the Essar group. Both companies have been holding discussions for around seven months now, two people familiar with the discussions told the Economic Times.

Both Maxis - which owns 74% of Aircel - and Aircel denied the talks when contacted by the newspaper, although a Loop Mobile source confirmed the talks were occurring.

"Valuation has complicated the process. More so, because market conditions have changed since the time talks started over seven months ago," said the source.

Any sale could be complicated by a legal dispute with Vodafone, which is trying to stop the Essar group from using Loop Mobile as a route into setting up a competitor to its own Vodafone Essar network. As part of Vodafone's move into the Indian market, the company agreed to buy BPL Mobile from the Ruias of the Essar Group and merge it with Vodafone Essar.

The Ruias originally brought BPL Mobile on behalf of Hutch in 2005, but then refused to transfer the ownership, citing lack of regulatory permission for the merger of BPL with Hutch (now Vodafone Essar) after their agreement ended in August 2006.

Although the Ruias own 33% of Vodafone Essar and should be prevented from setting up competing companies, it is thought that they want to hold onto BPL Mobile and use its licenses to build up another telecoms operator. Vodafone is known to has sought legal advice over the firms plans to build a national wireless local loop operator though licenses held through an unrelated company, which just happens to also be called Loop Telecom.

The rebranding of BPL Mobile as Loop Mobile last month raised speculation that Essar Group is proceeding with its national network plans.

In February, Loop Mobile announced that it had passed the 2 million subscriber mark. Comparative figures from the Mobile World subscriber tracker for the end of last year, report that the city had just under 17 million mobile phone users - broken down by Vodafone (4.2m), Bharti Airtel (2.74m), MTNL (2.1m), Tata (2.1m), BPL Mobile (1.95m), Idea (325,000) and 5.7 million for the CDMA operators.

On the web: Economic Times - Mobile World

Posted to the site on 7th April 2009