A person speaks on his cell phone subsequent to a Vodafone commercial in Kolkata, India, September 26, 2016. REUTERS/Rupak De Chowdhuri

LONDON Vodafone (VOD.L) stated on Monday it was in talks to merge its Indian operations with rival Idea Cellular (IDEA.NS) in an all-share deal that may create a brand new market chief higher ready to deal with the brutal worth conflict convulsing the business.

India’s three main cell operators, Bharti Airtel BRTI.NX, Vodafone and Idea, have all been hammered by the arrival of Jio Infocomm, a brand new operator owned by the billionaire Mukesh Ambani which has shaken up the market by providing free voice and knowledge to clients.

Vodafone confirmed rising media hypothesis that it was in talks with Idea’s guardian, conglomerate Aditya Birla, over a deal that may lead to Idea issuing new shares to Vodafone.

Vodafone’s inventory jumped 3 p.c after it stated a deal would allow it to deconsolidate the asset, or take it off its books, and obtain a dividend from the mixed group.

Bharti and different native rivals, together with Vodafone’s India unit, have slashed pay as you go tariffs and unveiled cheaper knowledge plans to compete in opposition to Jio.

But analysts warn that the technique will extract a value, with Vodafone compelled right into a $5 billion writedown of its India enterprise final yr due to competitors within the nation.

Vodafone has been seeking to spin off its Indian enterprise however stated on Nov. 15 it will await market circumstances to stabilize earlier than itemizing Vodafone India’s shares.

(Reporting by Kate Holton in London and Sankalp Phartiyal in Mumbai; modifying by William Schomberg and Louise Heavens)

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