British mobile phone giant Vodafone said Monday that it was in talks to merge its Indian unit with Idea Cellular in a move that would create India's largest telecoms company. The confirmation ended months of speculation that the two operators were exploring a deal to help fend off Reliance Jio whose recent arrival shook up India's ultra-competitive mobile network market.
It also sent Idea shares soaring by a whopping 26 percent on the Bombay Stock Exchange (BSE).
"Vodafone confirms that it is in discussions with the Aditya Birla Group about an all share merger of Vodafone India (excluding Vodafone's 42% stake in Indus Towers) and Idea," Vodafone said in a statement.
"Any merger would be effected through the issue of new shares in Idea to Vodafone and would result in Vodafone de-consolidating Vodafone India.
"There is no certainty that any transaction will be agreed, nor as to the terms or timing of any transaction," the statement added.
A merger between Vodafone India and the Mumbai-based Idea Cellular would turn India's multi-billion dollar telecommunications market on its head, according to global brokerage firm CLSA.
The group of analysts has estimated that the pair would command a combined revenue market share of 43 percent, ahead of rival Bharti Airtel, which would hold 33 percent.
Reliance Jio, which began operations with great fanfare last year and is owned by India's richest man Mukesh Ambani would have 13 percent, according to CLSA's research.
The 4G Jio network launched in September with an audacious free service for the rest of 2016, followed by vastly cheaper data plans and free voice calls for life.
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