India's Loop Telecom latest casualty of 2G scam-report

April 10 Mon Apr 9, 2012 11:27pm EDT

April 10 (Reuters) - India's Loop Telecom will close down its operations and seek a 38 billion rupee ($740.81 million) refund from the government, the Mint newspaper reported on Tuesday, in the latest corporate fallout from a multi-billion dollar corruption scandal.

India's Supreme Court in February ordered cancellation of 122 telecoms licences held by eight operators, including that of Loop Telecom, because of alleged irregularities in the way they were awarded in 2008.

A state auditor estimated New Delhi may have lost as much as $34 billion as the permits were given out at "unbelievably low" prices.

Loop will cease operations on May 15 and has demanded the government refund its license fees plus interest, compensation charges and bank guarantees, Mint reported, citing a letter to the government signed by the company's managing director.

The move would affect only 6,000 subscribers and would not impact Loop Mobile India Ltd, an associate that runs mobile services in the city of Mumbai, the newspaper added.

Loop Telecom could not be reached by Reuters for comment. A spokeswoman for Loop Mobile said that Loop Telecom would respect the decision of the Supreme Court.

Loop would be the third casualty of the scandal and subsequent investigation, after Abu Dhabi's Etisalat said it would shut down its Indian operation and Bahrain's Batelco, whose Indian joint venture is set to lose all its six licences, agreed to sell its 43 percent stake. ($1 = 51.2950 Indian rupees) (Reporting by Henry Foy in MUMBAI; Editing by Ranjit Gangadharan)