Powered by Loop, Airtel to challenge Vodafone in Mumbai

After Bharti Airtel’s recent acquisition of Loop Mobile, the oldest telecom operator in Mumbai, the city is set to be a battlefield between Airtel and rival Vodafone India.

Mumbai, India’s most populous city, is also one of the most lucrative telecom circles in the country, in which Vodafone had the largest number of subscribers till Airtel’s Loop buy.

“Airtel has the numbers advantage, but the fight would be really for the high-paying mobile subscribers and enterprise customers. These are the customers who seek quality services,” said Kamlesh Bhatia, research director at Gartner.

On Tuesday, Airtel acquired Loop, a move that will help the country's largest operator by subscribers to strengthen its presence in Mumbai. While financial details of the deal were not disclosed, industry sources pegged the deal at ₹700 crore.

As of December-end, Vodafone India, the second largest operator by subscribers, had more than seven million users in Mumbai, followed by Airtel’s 4.3 million and Loop’s 3.2 million. However, the acquisition of Loop’s 3.2 million subscribers would make Airtel the leader in Mumbai.

“Another benefit for Airtel is the high average revenue per user (ARPU) customers of Loop. A majority of them are post-paid users,” said a Mumbai-based analyst, who declined to be named.

According to industry data, Vodafone’s ARPU (a telecom company’s key financial metric) for the July-September quarter was at ₹274, while that of Airtel was at ₹167. Loop’s ARPU stood about ₹200.

After the acquisition, Airtel’s visitor locator registry (VLR) market share will increase to 22 per cent in Mumbai, while Vodafone India already has 25 per cent. As of December end, Airtel had a 16 per cent and Loop a 6 per cent VLR, according to a report by Motilal Oswal Securities.

VLR is a database of subscribers roaming within a mobile switching centre and is considered by industry more reliable than the subscriber base.

Vodafone, which provides GSM services, is also leading on the revenue market share (RMS) front. The company had a 35 per cent RMS as of December, while Airtel (21 per cent) and Loop Mobile (5 per cent) combined would be 26 per cent.

According to an HSBC report, the main challenge for Airtel is to retain acquired subscribers and if it chooses not to deploy 900 MHz for voice (stronger spectrum).