Loop Telecom to exit business

Loop Telecom has become the third mobile operator to shut shop after a Supreme Court verdict in February cancelled 122 licences including Loop’s.

According to sources, the operator has asked all its GSM customers in its 13 circles of operation to port out latest by April 30 as it plans to completely stop operations by May 15.

A company statement said, “Loop Telecom is in the process of complying with the directive of the Honorable Supreme Court of India.”

Loop Telecom has a subscriber base of 6,000 subscribers, which translates into a miniscule 0.00066% share of the Indian telecom market, according to data from the telecom regulator.

The development would not have any impact on Loop Mobile, which operates in the Mumbai circle and has around 32,50,000 subscribers in Mumbai.

Loop Mobile said in a statement, “Loop Mobile is Mumbai’s non-stop operator with a strong subscriber base of over 3 million customers across over 50 Loop Mobile galleries in Mumbai.”

Loop Mobile was earlier BPL Mobile before Essar group acquired the company from BPL and renamed it as Loop.

Loop Telecom and Loop Mobile are both owned by Essar Teleholdings.

Loop Telecom, sources said, was already looking at an exit strategy and the decision to wind up following the SC ruling was just a formality.

An industry analyst said, “Loop Telecom was among the first of the new operators to explicitly request for an exit option and refund of its entry fee. Thus, after the SC turned down the review petition over the 2G verdict, this was the next logical step, since Loop would have time only till June 2 to continue its operations.”

“In case there was a revision of the verdict or an extension of the deadline till the new 2G auctions slated for the end of the year, Loop may have stuck around,” the analyst said.

Earlier S Tel and Etisalat DB, whose licences were also cancelled, announced winding up of operations and asked their subscribers to port out to another operator.

It is also expected that unlike Etisalat DB, which is under fire from its investors for alleged failure to meet financial obligations, Loop Telecom will not have any issue in honouring its obligations to stakeholders.
 
Shoubhit Khare, telecom analyst with Motilal Oswal, said, “Since the scale of operations was very small, the losses would be minimum. Besides, the operator had not rolled out services in many circles and so the question of dishonouring financial commitment does not arise.”