By Ian Walker

LONDON-- Vodafone Group on Monday said it is in talks to merge its Indian unit with the country's third-largest mobile operator, Idea Cellular Ltd., as the British company battles tough competition in one of its biggest markets.

The U.K.-based company said it is in talks with the Aditya Birla Group, which controls Idea, about an all-share merger but cautioned there was no certainty a deal would be done. It also added that any deal would exclude its 42% stake in Indus Towers.

Vodafone, the world's second-biggest mobile carrier by subscribers, was responding to media speculation. The Times of India earlier reported the two companies were in merger talks.

Vodafone holds the No. 2 position in India but is under pressure from lower-cost rivals, prompting it to write down the value of the business by EUR5 billion ($5.35 billion) late last year.

New mobile carrier Reliance Jio Infocomm Ltd., funded by India's richest man, has offered free service for at least a month to get new customers.

Vodafone's chief financial officer, Nick Read, said at the time of the write-down in November that the company was still prepared for an initial public offering of its Indian unit but was waiting for market conditions to improve.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

January 30, 2017 04:25 ET (09:25 GMT)

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