A deal to create the largest mobile network in Mumbai with more than seven million users has fallen foul of the country’s Department of Telecommunications (DoT), according to The Economic Times.

Concerns have arisen over Bharti Airtel’s proposed acquisition of smaller rival Loop Mobile, which the DoT said would result in a revenue loss to the government.

The deal would add about four million of Bharti’s subscribers in Mumbai to about three million from its smaller rival, which operates only in the city.

Loop’s licence in Mumbai expires in less than two months, which means DoT’s objection creates uncertainty for its subscriber base.

The two companies struck an initial announcement in February this year, followed by a definitive agreement in June.

The Telecom Regulatory Authority of India wrote to DoT, saying the terms of the takeover implies users will be ported involuntarily from Loop to Bharti.

The problem for the government is that, under the country’s number portability rules, normally users pay a fee of INR19 for voluntarily transferring their number between operators. Of that sum, one per cent goes to the government. Hence, it stands to lose out, given the current terms of the deal.