Vodafone is reportedly considering a buyout of its Indian rival Tata Teleservices.
If a deal is reached, the resulting entity would be the largest mobile operator in India. The operator group is currently holding talks with Tata Group, which has a 59.5% stake in Tata Teleservices.
An anonymous source noted: “discussions are at an early stage. It is difficult at this stage to say what the outcome of these talks will be.” However, it is understood that Vodafone is looking to buy out all of Tata Teleservices’ shareholders.
Adding Vodafone’s 158 million subscribers to Tata Teleservices’ base of 63 million would put the combined entity well ahead of current market leader Bharti Airtel, which has around 197 million connections.
Reaching an agreement may be complicated by factors relating to NTT Docomo, which holds the second-largest stake in Tata Teleservices (26.5%). The Japanese operator has first refusal on Tata’s stake; however if it declines this option then it can be legally forced to sell its stake to a buyer selected by Tata.
However, if Docomo does want to sell its stake, further parameters could result in Tata being required to buy the stake itself. It is unclear exactly what criteria must be met for this situation to arise.
