The Competition Commission of India has approved the proposed merger between Indian operators Vodafone India and Idea Cellular, which would create the market's largest mobile operator by subscribers.
The regulator has cleared a proposal that would see Vodafone initially holding a 50% stake in the combined company, Idea's major shareholder the Aditya Birla Group holding 21.1% and public shareholders owning 28.9%, the Economic Timesreported.
Under the plan, Vodafone would then sell a 4.9% stake in the combined operator to the Aditya Birla Group for 39 billion rupees ($605.8 million) in cash upon completion of the merger.
But both companies still require approval from the Securities and Exchange Board of India, which is investigating whether the deal would trigger an open offer under India's takeover regulations.
These rules require entities acquiring at least 25% of a listed company to make an open offer for an additional 26% from public shareholders.
The proposed $23 billion merger between Vodafone and Idea Cellular was first announced in March. The combined company will have nearly 400 million subscribers and a revenue market share of around 40%, dethroning Bharti Airtel as the current market leader.
High debts accumulated from spectrum purchases and the entry of Reliance Jio Infocomm into the market with its deep pockets and disruptive pricing have triggered a wave of consolidation in India's telecoms sector. Reliance Communications and Aircel are also pursuing a merger, while Bharti Airtel last month secured required approvals to acquire Telenor India.