Vodafone Group and Aditya Birla Group, owner of Idea Cellular, agreed to merge their Indian operations, which will create the country’s largest mobile operator with nearly 400 million subscribers and a 37 per cent market share.

Vodafone will own 45.1 per cent of the combined company after selling a 4.9 per cent stake in the new entity to Birla Group chairman Kumar Mangalam Birla’s holding companies for INR38.7 billion ($580 million), according to a stock exchange filing today. Birla’s companies will hold a 26 per cent stake, and the rest will be owned by the public.

The merged company will have a market valuation of about $23.2 billion, Vodafone said in a statement.

Vodafone and Idea will each take three seats on the board of the new entity, which will have six independent directors. Birla will nominate the chairman, while Vodafone will appoint the CFO.

The deal is expected to be completed in 2018 and is subject to approvals from shareholders, creditors and government authorities.

Idea, the number three mobile player in India, announced earlier its board approved the merger.

Vodafone India, the country’s second largest operator, had a 19 per cent market share at the end of 2016, while Idea had an 18 per cent share, according to GSMA Intelligence. Both operators are hoping consolidation can help fend off increased competition in the market, particularly from 4G newcomer Reliance Jio, which launched service late September and since signed up more than 100 million customers.

Market leader Bharti Airtel’s 264 million subscribers give it a 25 per cent market share, but it agreed to acquire Telenor’s operations in India, with 54.5 million subscribers. The combined company will have about a 30 per cent market share.

Following media speculation in early January linking the two operators, Vodafone Group confirmed it was in talks to merge its Indian business with local rival Idea.

Aditya Birla Group owns 42 per cent of Idea, while Malaysia’s Axiata Group has a 20 per cent interest.

Last November Vodafone Group booked a $5 billion non-cash charge against its Indian unit, after injecting more than $7 billion into the subsidiary in September to prepare for the October spectrum auction and intensifying competition following Jio’s nationwide 4G launch.