"British mobile phone giant Vodafone will merge its Indian unit with Idea Cellular to create the country's largest telecoms operator", the firms said on Monday. Aditya Birla Group chairman Kumar Mangalam Birla will now become the chairman of the new entity.

"Vodafone Group Plc and Idea Cellular today announced that they have reached an agreement to combine their operations in India," they said in a statement to the Bombay Stock Exchange (BSE).

"The combined company would become the leading communications provider in India with almost 400 million customers, 35 percent customer market share and 41 percent revenue market share," the statement added.

The announcement ended all the speculation that the two operators were set to sign a deal to defeat Reliance Jio, whose recent arrival has shaken up India's ultra-competitive mobile network market.

The 4G Jio network was launched in September with free service for the rest of 2016 along with cheaper data plans and free voice calls for life.

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BY M.DIVYA SRI