India’s Reliance Communications entered into merger negotiations with Tata Teleservices in a move to further beef up its operation, amid increasing competition and proposed consolidation in the country.
According to The Economic Times (ET), Anil Ambani, chairman of the Reliance Group approached Tata Group over the matter, although talks are at an early stage.
The move could see Tata Teleservices join forces with RCom and Aircel, which are set to complete a 50-50 merger later this year, as well as MTS, which RCom agreed to acquire in 2015. The deal is finally expected to complete in March.
The deals will position the merged entity as the country’s third largest player, offering even more competition to market leader Airtel, as well as Vodafone India.
Vodafone India is looking to tie-up its own merger with Idea Cellular, the country’s current number three player, and as it stands would take top spot from Airtel.
All the country’s operators’ are looking to combat increased competition from Reliance Jio, which triggered a price war since its entrance late last year with low-cost data offers.
In five months of operations, Reliance Jio signed up 100 million subscribers.
A deal between RCom and Tata would face obstacles if the talks advance, noted ET, with Tata Teleservices’ debt load likely to cause issues.
There is also a long-running legal issue regarding NTT Docomo’s exit from Tata Teleservices which still needs to be resolved.