Tuesday, June 29, 2010
MTN in talks to buy stake in Loop
New Delhi: Africa’s largest mobile service provider MTN Group is in talks with India’s Loop Telecom to purchase a stake in the company, which owns mobile telephony licences in 21 circles.
Loop Telecom has been looking for a strategic investor for some time now and people close to the development said the telecom operator was willing to sell up to 45 per cent stake in the firm.
Loop, in which the Ruias of Essar Group have a less than 10 per cent holding, had also held talks with billionaire serial investor C Sivasankaran. The non-resident Indian investor had in the 1990s sold his Sterling Cellular to the Ruias, marking the group's entry into telecom.
MTN has been negotiating with Loop through merchant bankers, the people quoted said. A deal with Loop will provide MTN an entry into the giant India telecom market that is adding 14-15 million mobile phone users every month. The Johannesburg-based company had earlier made three attempts to enter India -- twice with Bharti Airtel and once with Reliance Communications -- all of which remained unsuccessful.
Loop began scouting for a partner after it was reportedly cleared by the Department of Telecommunications (DoT) earlier this month from charges of violating cross-holding restrictions.
DoT had launched investigations against Loop, which was awarded a pan-India unified service access license in 2008, following complaints that the Essar Group held more than 10 per cent stake in the company. Current regulations prevent telecom operators from owning more than 10 per cent in another operator in the same circle. Essar holds 33 per cent stake in the country's second-largest mobile firm, Vodafone Essar.
A Loop Telecom spokesperson said: "As a policy, we do not comment on market speculations." An e-mail questionnaire to MTN, and several reminders, failed to elicit any response.
When reached in London, Sivasankaran said he was not looking at any investment in the telecom sector or in Loop. Sivasankaran continues to be in the telecom business through S-Tel, a joint venture with Bahrain Telecommunications. The firm has licences to provide telecom services in smaller circles across the country.
Business Standard
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