Telenor refuses to be drawn on Tata Teleservices merger talk

Norway's Telenor Wednesday refused to comment on reports it is in talks to merge its Indian operations with local firm Tata Teleservices as it seeks to enlarge it presence in the vast mobile phone market.

The state-run Norwegian firm, the largest phone operator in the Nordic region, is seeking a majority stake in the proposed merged group, media reports have said.

"Telenor Group never comments on rumors or speculation," A Telenor spokesman said in an e-mail, while Tata Teleservices could not be immediately reached for comment.

Telenor won rights to operate in six Indian cellular zones earlier this month in an auction after India's Supreme Court cancelled its previous 13 permits due to irregularities in the 2008 bidding process.

Tata Teleservices part of the tea-to-steel Tata conglomerate has licences to operate in all of India's 22 mobile zones, making it an attractive partner for Telenor.

A deal between Telenor and India's Tata would mean the Tata Group would reduce its holding in unlisted Tata Teleservices, the country's sixth largest mobile phone operator by number of subscribers.

But Japan's NTT DoCoMo would retain its 26 percent stake, the reports said.

Telenor has had a rough ride since entering the crowded Indian mobile market four years ago, the world's second-largest by subscribers after China.

The Norwegian firm paid $1.10 billion for a majority stake in a phone venture with Indian property developer Unitech, which bought a licence in a distribution process. But then Telenor found itself mired in controversy.

Telenor's Indian unit was among eight mobile operators whose licences were cancelled by the Supreme Court on grounds the 2008 permit sale was under-priced and corrupt in what has become one of the biggest scandals in India's history.

Analysts say the ruling may have one welcome fallout for operators by leading to a long-anticipated industry consolidation as weak operators fall by the wayside or are swallowed up by stronger rivals. There are more than a dozen operators currently.

Local phone service providers such as Bharti Airtel, India's leading mobile phone operator, and Vodafone India whose licences were awarded before 2008 have not been hit by the 2008 court ruling.