A rumoured three-way merger between Indian mobile operators could create a true challenger to market leaders Bharti Airtel and Vodafone India.
Tata Teleservices, Aircel and Russia's Sistema are in early-stage talks exploring a potential merger that would create India's third biggest mobile operator by subscribers, Economic Timesreported, citing inside sources.
Tata Teleservices is 26%-owned by Japan's NTT DoCoMo. Tata and Sistema have been rumored to be in talks over a potential merger for months, but the addition of Aircel to the mix is a new development.
Merging Tata Teleservices, Sistema's MTS India (SSTL) and Aircel would give the combined entity around 135 million mobile customers.
This compares to over 141.6 million for Vodafone India and an Indian mobile subscriber base of over 183 million for Bharti Airtel.
The talks are early stage, there is a lot to work out and an agreement could be difficult to reach, the sources said.
But pundits believe that the crowded Indian mobile industry is in desperate need of a wave of consolidation. And with the government recently removing the cap on foreign investment in telecom companies so long as transactions are approved by the state, it would make sense for foreign players to drive this consolidation.