Loop Telecom In Talks To Sell Majority Stake

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Loop Telecom in talks to sell majority stake

4 Jun, 2008, 0045 hrs IST, TNN

BANGALORE/MUMBAI: Ruias of Essar, Vodafone's JV partner, are in play to cut a new telecom deal. Loop Telecom, a subsidiary of BPL Mobile in which the Ruias of Essar have a 9.9% stake, has initiated talks with international telco giants to sell controlling stake, valuing the enterprise at around $3 billion.

Sources said Middle East telecom giants Mobile Telecommunications Co (Zain) of Kuwait and Qatar Telecom (Q-Tel) have explored early interest in the new telecom operator. It is believed that the largest Arab player Etisalat and US giant AT&T along with Russia’s Altimo has also looked at the proposal.

When contacted, BPL Mobile declined to comment. Sources said two investment banks have been mandated to scout for a partner. Loop could look at selling up to 74% stake in the company. Earlier this year, Loop received nod to start GSM operations in most of India’s 23 telecom circles, and figures in the ongoing spectrum allocation.

Incidentally, banking sources said Essar may also look at the option of combining its stake in BPL Mobile, which operates in the lucrative Mumbai circle. This is interesting as BPL Mobile’s majority shareholding is under arbitration following a dispute with the Vodafone JV.

“BPL figures in early dialogue with potential suitors, but it’s not clear as to how it will be structured as part of the Loop transaction,” a source said, while explaining that the final valuation of Essar’s standalone telecom interests would depend on the structure they put before the investors.

Sectoral analysts said Loop proposal may be one of the sought-after ones in a market where several deals are at play simultaneously. The country’s new operators, which received the nod early this year, are currently in the market scouting for strategic partners. The list includes Videocon-promoted Datacom, realty major Unitech, and Swan Telecom, which is linked to a Mumbai real estate house.

The list excludes other ongoing deals involving established players like Tata Teleservices and Spice Telecom. ET has already reported that Etisalat has emerged as a strong front-runner to take 8-10% stake in Tata Tele for about $1 billion. And it is the Middle East telcos that lead the list of foreign players seeking entry into India’s booming telcom market, besides AT&T and European giants like Telekom Italia, which has renewed interest in the domestic market.

The global telcos are seen exploring most of the potential deals on offer. India’s telecom regulations, which allow foreign players to hold a maximum 74% stake in a company, prevent the same entity from acquiring more than 10% in rival firms. This would restrain Etisalat from picking up major exposures in multiple companies with which it is in discussions.