India’s third largest operator Idea Cellular reportedly denied it was in merger talks with larger rival Vodafone India, dismissing a national story breaking the rumour as “baseless and absolutely false”.

The story, released earlier this week by broadcaster CNBC TV18, reported the two sides were in talks over a tie-up, citing unnamed sources.

However, in an emailed statement to Reuters, spokeswoman Aditya Birla slammed the report, insisting that it was “absolutely untrue and preposterous. There is no such intent,” she said.

Indeed, if there was any truth in the rumours, a tie-up between the two operators would have a significant impact on India’s highly competitive telecoms market.

Aside from beefing up their respective operations in the face of new competition from Reliance Jio, which is expected to launch commercial operations in the coming months, it would also see the joint entity become India’s market leader, ahead of Bharti Airtel.

According to estimates from GSMA Intelligence for connections in Q3 2016, a combined Vodafone India (with 201.5 million) and Idea (180.4 million) would have more than 380 million connections, far surpassing Bharti Airtel’s 260.2 million.

Put into context with China, the only market India trails in terms of mobile phone subscriptions, the joint entity would be bigger than both China Unicom and China Telecom, second and third in the market respectively, but still trail market giant China Mobile significantly, which is estimated to have 928 million connections.

Such a deal, however, would also face tough regulatory scrutiny, making approval unlikely, added analysts speaking to Reuters.

The size of such a deal would mean the companies would breach India’s 50 per cent revenue market share limit in many regions.

“I’m doubtful whether this can go through, but there could be some other form of merger such as spectrum sharing deals,” said Naveen Kulkarni, PhillipCapital analyst.