Loop Mobile is one of the 2 incumbent operators in Mumbai (Vodafone is the other) with ~3m subscribers, ~Rs150 ARPU and 5.5% revenue market share. The company didn’t participate in the recently concluded auction to renew its license. This would have forced the company to either shut its network or sell to an existing license holder in Mumbai.
How Airtel Benefits from the Deal ?
Airtel acquired 900MHz spectrum in the recently concluded auction (didn’t possess previously). This acquisition will help it utilize Loop’s existing network (which is on 900MHz band), reducing rollout capex. Bharti currently has a 21% revenue market share v/s Vodafone at 36% in Mumbai. Acquisition of Loop will also help it narrow the market share gap and give it access to Loop’s post-paid subscribers (not all would have used MNP to migrate to other networks).
Airtel 3G in Mumbai Gets a Boost Airtel already has license to operate 3G in the Mumbai Circle. It can ow use the 900MHz Spectrum to boost its 3G services as most handsets available in the market are already compatible thus providing some upside for Airtel’s ARPU.
Airtel has 1.6x as many cell sites as Loop in Mumbai and it operates in the 1800MHz band, which requires more cell sites to achieve coverage. As such, Bharti is in a position to close down many of the acquired operation’s cell sites. If Bharti were to retain c40% of the Loop cell sites in Mumbai, it could generate cUSD20m of network cost savings
Going forward, Mumbaikars can expect some pampering by the Mobile operators as Vodafone is very serious about operating in this market so is Reliance Jio Infocomm.