Telenor in talks with Tata Tele for merger of India unit

Norwegian telecom company, Telenor, is in talks with Tata Teleservices to combine their operations in India, three people with direct knowledge of the matter said.

Japan’s NTT DoCoMo, which owns a 26 per cent stake in Tata Teleservices, was likely to remain a shareholder in the merged entity, said one person, asking not to be identified because the information was private. Any deal would depend on new takeover rules currently being considered by the Telecom Regulatory Authority of India, the people said.

The combination would create India’s fourth-largest operator by users, while Tata Teleservices would gain spectrum, which it could use to boost offerings as it shifts customers to the GSM technology.

While both Telenor and Tata Tele refused to comment, calling the buzz market speculation, Junpei Toya, a spokesman for NTT DoCoMo, said over phone: “We are going to maintain our stake for the time being.” Toya declined to comment on the prospect of a merger between Tata Teleservices and Telenor.

Incidentally, Telenor’s Global President and CEO Jon Fredrik Baksaas is scheduled to be in Delhi on Thursday. He is also expected to hold a press conference that day.

Under an agreement, Telenor might have the option of buying out the Japanese company in a few years, one person said.