Loop quits, will surrender 21 mobile licences barring Mumbai

New Delhi: Loop Telecom, one of the companies whose telecom licences were cancelled by the Supreme court judgement of 2 February, has called it quits. Mumbai circle will, however, be the exception since it is governed by a different licence.

The promoters of the company, owned by IP and Kiran Khaitan, sister of Ravi and Shashi Ruia, have been charge-sheeted by the Central Bureau of Investigation (CBI) on the ground that they were proxies for the Ruias of Essar, who were promoters of Vodafone Essar. Under telecom law, the same promoter cannot hold 10 percent or more in a rival telecom company in the same circles.

Loop has now informed its 6,000 subscribers outside Mumbai that it will cease services from 1 June and that they should port their numbers to other mobile service providers.

The company operates in 21 circles besides having a separate licence for services in the Mumbai circle. The Mumbai services have not been impacted but all licences for all other circles stand cancelled.

The withdrawal of Loop’s services will impact subscribers in Haryana, Kolkata, Madhya Pradesh, Odisha, Punjab, Rajasthan and some other states. The Mumbai licence was bagged by a separate company, Loop Mobile India.

Loop is following in the footsteps of 2G operators such as Etisalat and S Tel which have also indicated to their subscribers that their services will be opeartive only till 1 June. After that they will have move elsewhere.

Loop Telecom has about 150 employees and they have also been told to look for alternatives now that the company has to comply with the SC judgement.

As reported by Firstpost some time ago, the CBI has accused the Ruias of Essar of cheating and criminal conspiracy in obtaining licences from Andimuthu Raja in January 2008. The CBI’s main claim is that the Ruias are the real promoters of Loop Telecom, and not Kiran and IP Khaitan.

The case is simple: Loop applied for a Unified Access Service Licence (UASL) in 21 circles and obtained it on 10 January 2008 along with the rest of Raja’s beneficiaries.

But soon after the licence was allotted to Loop, rival telecom companies filed complaints with Raja alleging that Loop was not really owned by IP Khaitan and Kiran Khaitan. Rather, it belonged to Kiran Khaitan’s brother and relatives - the Ruias, who were till recently co-promoters of Vodafone Essar.

The Essar Group had a 33 percent stake in Vodafone through companies registered in India and Mauritius when Loop was given its licence. Under clause 8 of UASL rules, it should not have more than 10 percent in Loop or, for that matter, any other telecom company in the same circles.

Raja sent the complaints to the corporate affairs ministry for further investigation. In May 2009, the ministry confirmed that the Essar Group had “significant control or influence” over Loop Telecom.

This is when Raja seemed to favour the Ruias. Instead of moving on the corporate affairs ministry’s report, he did not take any action against Loop.

The 106-page FIR was filed in December with the designated CBI court at Patiala House in New Delhi and it names five Essar group promoters - Prashant Ruia, Ravi Ruia, Loop Telecom promoters IP Khaitan, Kiran Khaitan, and Essar Group Director (Strategy and Planning) Vikas Saraf.