London - Vodafone said on Monday
it was in talks to merge its Indian operations with rival Idea
Cellular in an all-share deal that would create a new
market leader better able to cope with the brutal price war
convulsing the industry.
India's three leading mobile operators, Bharti Airtel
, Vodafone and Idea, have all been hammered by the
arrival of Jio Infocomm, a new operator owned by the billionaire
Mukesh Ambani which has shaken up the market by offering free
voice and data to customers.
Vodafone confirmed growing media speculation that it was in
talks with Idea's parent, conglomerate Aditya Birla, over a deal
that would result in Idea issuing new shares to Vodafone.
Vodafone's stock jumped 3 percent after it said a deal would
enable it to deconsolidate the asset, or take it off its books,
and receive a dividend from the combined group.
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Bharti and other local rivals, including Vodafone's India
unit, have slashed prepaid tariffs and unveiled cheaper data
plans to compete against Jio.
But analysts warn that the strategy will extract a cost,
with Vodafone forced into a $5 billion writedown of its India
business last year because of competition in the country.
Vodafone has been looking to spin off its Indian business
but said on November 15 it would wait for market conditions to
stabilize before listing Vodafone India's shares.