India's Reliance Communications has confirmed it is in exclusive talks with Sistema regarding a potential merger with the Russian telecom group's Indian unit.
RCom is discussing a potential stock-swap deal with Sistema that would result in a merger with Sistema Shyam Teleservices, which offers services under the MTS India brand.
In a stock market filing, RCom said any deal is subject to due diligence and obtaining the necessary approvals, and there is no certainty that any transaction will result.
A merger would nevertheless be consistent with rumors that Sistema is seeking an exit from the Indian market and RCom is searching for acquisition targets.
Last month, Bloombergreported that negotiations between the two companies are taking place, citing people close to the discussions.
SSTL offers CDMA services in nine of India's 22 telecom circles, while RCom provides pan-India CDMA and GSM services.
A merger would give RCom access to valuable LTE spectrum in the 850-MHz band to complement the spectrum it acquired in a recent auction. RCom plans to launch 850-MHz LTE services by the end of the year.
Sistema first entered the Indian market in 2007, but the company faced a major setback in 2012 when all but one of its licenses were cancelled along with numerous others during the 2012 investigation into the 2G spectrum scandal. The company was forced to buy back spectrum to stay in operation.