Telenor, Tata Tele in talks to merge India operations

MUMBAI/NEW DELHI Tue Nov 27, 2012 10:43pm IST

The sun rises behind a communications tower in New Delhi March 20, 2006. REUTERS/B Mathur/Files

The sun rises behind a communications tower in New Delhi March 20, 2006.

Credit: Reuters/B Mathur/Files

Related Topics

Stocks

   

MUMBAI/NEW DELHI (Reuters) - Norway's Telenor(TEL.OL) is in talks to merge its Indian operations with Tata Teleservices to gain a bigger foothold in the world's second-biggest mobile phone market, a source with direct knowledge of the situation said on Tuesday.

Telenor, which won rights to operate in six Indian zones in an auction this month after its earlier permits were ordered to be revoked, is looking to take a majority stake in the merged entity, the source said.

The deal will see India's Tata Group cutting its stake in unlisted Tata Teleservices, the country's No. 6 mobile phone carrier, said the source, declining to be named due to the sensitivity of the matter.

The merged entity will be ranked No. 5 by customers.

Japan's NTT DoCoMo (9437.T), which owns a 26 percent stake in the company, will retain its holding in the combined entity, the source said.

Telenor and Tata Teleservices declined comment. NTT DoCoMo could not immediately be reached for comment in Tokyo outside their business hours.

With more than 900 million mobile phone customers, India's mobile phone market is second only to China.

The crowded market, which boasted 15 players until the first half of this year, is ripe for consolidation, analysts have said, as competition and rising debt levels eat into profit margins.

However, there have been few deals, mainly due to regulatory uncertainty and strict government rules on ownership and airwave holdings.

A cabinet decision this month determined that companies buying a carrier that paid a low state-set price for airwaves must match a far higher price determined in a recent auction and pay the difference to the government.

Singapore state investor Temasek owns about 7 percent of Tata Teleservices, while Indian business man C. Sivasankaran holds about 8 percent. It was not immediately clear if their holdings would change if the deal goes through.

Telenor, which earlier operated in 13 Indian telecom zones, will now be reduced to six zones with 34 million customers, while Tata Teleservices has permits for all of India's 22 zones.

(Editing by Jason Neely)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Popularity Poll

REUTERS SHOWCASE

Record Highs

Record Highs

Nifty touches record high; software stocks gain.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

Pricing Mechanism

Pricing Mechanism

Govt sets up a four-member panel to re-examine gas pricing.  Full Article 

Royalty Rates

Royalty Rates

India to hike iron ore royalty, miners may struggle to pass on extra cost.  Full Article 

Diesel Deregulation

Diesel Deregulation

Oil ministry to seek Cabinet nod on diesel deregulation - sources  Full Article 

Commodities

Commodities

Gold near two-month low; set for weekly drop on interest rate fears  Full Article 

Reuters Exclusive

Reuters Exclusive

Apple iPhone 6 screen snag leaves supply chain scrambling   Full Article 

Helping Regional Mills

Helping Regional Mills

Govt raises sugar import duty to 25 pct from 15 pct.  Full Article 

Curbing Risks

Curbing Risks

RBI to lower ceiling on bank loans to a single corporate group.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage