Russian operator MegaFon has denied reports that it is in talks with smaller rival Tele2 Russia regarding a potential carve-up of the Swedish-owned network.

Russia’s Vedomosti newspaper reported yesterday that Garsdale, an investment vehicle of MegaFon’s majority owner Alisher Usmanov, is proposing to buy Tele2’s Russia assets and divide them up between MegaFon and the country’s other two large operators VimpelCom and MTS.

However, a Garsdale spokesman told Reuters that “no negotiations are in place.”

The earlier report had valued Tele2’s Russian assets at around $2.5 billion. The operator is a distant fourth place in the Russian market and lacks 3G and 4G licences.

Merrill Lynch said in a research note that a carve-up of Tele2 would be a positive for MegaFon, MTS and VimpelCom as it would reduce competition, but would be a negative for state-controlled operator Rostelecom.

Rostelecom is predominantly a long-distance fixed-line and broadband provider, and has previously been linked with a merger with Tele2 in order to beef up its mobile credentials. Tele2 was also thought to be keen on a deal in order to get access to Rostelecom’s licences.