Vodafone India and Idea Cellular are reportedly on the verge of finalizing the terms of a major merger that would create India's largest operator by subscribers.
The operators are expected to finalize the agreement within a month and could be ready to announce a deal by the end of the week, sources toldPress Trust of India.
Vodafone Group has brought in former India head Martin Pieters to work on the proposed merger, according to the report.
But the proposed merger could be complicated by the fact that Indian regulations prohibit an operator from holding more than 25% of the total spectrum allocated in a single circle, 50% of the spectrum from a single band within a circle and 50% revenue or subscriber market share.
The operators may therefore need to agree to divest certain spectrum and other assets to secure regulatory approval.
A merger between the two operators would create an entity with a revenue market share of around 40% and a subscriber base of over 380 million, propelling the combined company ahead of current market leader Bharti Airtel.
India's crowded mobile industry is going through a consolidation phase, triggered by intensifying competition as a result of the entry into the market of disruptive and deep-pocketed newcomer Reliance Jio Infocomm.
Aircel and Reliance Communications are reportedly also negotiating a merger, and Telenor India is said to be attempting to get in on the deal to make it a three-way merger. The combined company would be the second largest operator in the market behind Airtel, or the third largest in the event of a Vodafone-Idea merger.