New Delhi: As many as 30 lakh customers in Mumbai might be left in the lurch after Bharti Airtel did not renew its agreement to buy Loop Mobile due to delay in permission from the Department of Telecom (DoT).
Bharti Telecom was supposed to purchase the crises-hit Loop Mobile’s Mumbai network but the definitive agreement signed between the two expired on October 30 and was not renewed leading to the Rs. 700-crore deal falling through.
Only four weeks are left for Loop’s licence to expire and sources said the reason was “the issue being stuck for approval with the DoT”.
Loop has been facing problems on many fronts beginning with its Dubai-based Khaitan family getting embroiled in the 2G scam and its promoter I.P. Khaitan was also questioned by the CBI. Besides, the company is contesting DoT slapping a notice for Rs. 800 crore in dues.
An industry insider pointed out this is the second time under the new government the DoT has taken inordinate time to give formal approvals. It had not allocated frequency to half a dozen telecom operators who had won it as far back as February and even made the payments. Vodafone’s ultimatum to the government earlier this month played a part in the frequencies being farmed out soon after.
In this case, he felt, it was too late to do anything if Bharti Airtel stuck to its decision not to renew the definitive agreement for sale signed with Loop.
DoT officials directly responsible for the processing could not be reached but another official felt the Telecom Regulatory Authority of India’s observations led to circumspection. Trai had objected to the migration of Loop’s subscribers to Airtel on grounds that the compulsory transfer of customers will break the rules on number portability which advocate voluntary migration.
In addition, for each migration, the recipient company has to pay the one per cent of the porting fee to the Government. This case becomes a bit odd because no porting fees is being charged from the customers. This means that on paper, the government does not get anything from the migration.
If Bharti sticks to its decision, lenders to Loop will be affected, mainly Axis Bank which had quarterbacked a Rs. 350-crore deal and has an exposure of Rs. 215 crore.
