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Vodafone Group Plc (ADR) (NASDAQ:VOD) is close inking an initial agreement that will see it merge operations in India with Idea Cellular Ltd. The merger will lead to the formation of the biggest telecom company in one of the most competitive markets globally.

According to sources privy to the matter, the two companies to sign an initial deal as early as this month. The initial agreement is unlikely to elaborate on the details of the merged company’s structure of shareholding because they are still working on the details.

Indian carries are seeking to consolidate following the introduction of free services by Reliance Jio Infocomm Ltd with the support of billionaire Mukesh Ambani. The decision by Reliance Jio Infocomm Ltd is seen as one that undermines revenue. The competition has led to the formation of an alliance comprising of Vodafone India, India’s No.2 provider and the country’s third largest company, Idea which is controlled by Aditya Birla Group

According to sources, the new alliance will be led by billionaire Kumar Mangalam Birla as the chairman. Vodafone is likely to sell off part of its ownership in the new company, while Birlas is likely to purchase shares from other investors to bring their stake in the merger to 26%.

It remains largely uncertain on when the agreement will be finalized. According to information from The telegraph Idea and Vodafone are close to inking the deal. Representatives from the two companies have remained economical on information regarding the proposed merger. Talks between the majority stake holder in Idea an Vodafone will lead to Vodafone merging its business in India with Idea and deconsolidating the unit. The deal does not however include the 42% stake that Vodafone hold in Indus Towers Ltd. Both Vodafone and Aditya Birla have equal stake in the merged company. This is according to exchange filing by Idea in January.

Vodafone is a telecommunication company with its business established in two geographical regions Europe, and Africa, Middle East and Asia Pacific. In Europe, the company has businesses in Italy, Germany, Spain and United Kingdom.

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