Sources privy to the negotiations said Sunil Bharti Mittal-led Airtel has almost completed agreement with Loop Mobile and the announcement will come in a couple of days.
The deal is likely to be finalised for about Rs 700 crore, they added. Loop Mobile has a debt of Rs 400 crore, which is likely to be included in the final transaction.
When contacted, Loop, which operates in Mumbai service area only and had over 3 million subscribers as on November, declined to comment.
Airtel spokesperson also refused offer comments.
This buyout could be the first deal at a time when industry is gearing for consolidation. Though government is about to announce new M&A guidelines, the deal can go through even under the existing rules.
Loop's licence is expiring in the last quarter of this year. As per present rules, Loop which holds 8 mhz of airwave frequency in 900mhz band was required to participate in auction that concluded on February 13 to win back its spectrum for continuing operations.
The company, however, did not participate in the auction.
On the other hand, Airtel participated in the auctions and bought premium 900mhz spectrum in Mumbai service area for about Rs 2,800 crore. This amount is 70 per cent premium over the base price.
As per Sebi data, the telecom major had about 4 million customers in November. If it acquires Loop, it will have total customer base over 7 million. Vodafone with 6.9 million customers (as of November) is the biggest operator in the city at present.
Sources said Loop is in talks to sell both its mobile and tower business. Loop has about 2,000 operational mobile tower sites, of which 500 are company-owned.